Inaugural Hopes, Promises, and Red Ink

I’m in DC, so it’s a bit hard to escape the throngs of people here for the inauguration. What’s remarkable is that everyone seems so, well…friendly and nice. No exultant “we kicked their butts” fist pumping about the victory over McCain. Everyone seems friendly and full of hope. (I’m sure that many of those hopes will be dashed. As it turned out, then president-elect Obama did not actually walk across the surface of the Potomac to the inauguration.)

I was at an event Sunday night at the Metropolitan Club that was hosted by the University of Chicago. The program was presented as “From Hyde Park to the White House.” (President Obama had been a lecturer at the University of Chicago, and the First Lady had worked there, as well). It featured three U of C grads — journalist Ray Suarez, New York Times columnist David Brooks, and U of C B-School professor and Obama advisor Austan Goolsby. Brooks had had dinner with Obama at George Will’s house and noted how graciously Obama had asked him “What vintage wine would you like your water turned into?” That set a nice tone for the discussion.

Unsurprisingly for an advocate of big-government conservatism, Brooks endorsed the gigantic bailouts and “stimulus” package(s) flowing out of Washington, as did Goolsby. Both insisted that “everyone, right or left, Democrat or Republican,” etc., etc. supported massive government spending to “stimulate” the economy. I pointed out in a question that that was not true, as numerous economists opposed such spending plans (I mentioned Nobel Laureate Ed Prescott) and asked why assets should not be repriced by the market, why malinvestments should not be liquidated, why firms such as GM and Chrysler should not be reorganized through bankrupty, emerging minus their incompetent managers, and when the bidding war to print as much money as possible and spend it as recklessly as possible would end.

Goolsby replied that he believes that Prescott is smart, but that he (Prescott) doesn’t believe that there is a gap between actual and possible production (presumably to be leapt by handing out fiat money), so … well, what can one say? In addition, he (Goolsby) does not favor spending to keep asset prices from falling or to keep markets from working. Moreover, they will spend the money wisely. It was cordial, but I did not find any of it at all convincing. (A number of people in the audience said the same and thanked me during the reception after; I was also not the only questioner who challenged the wisdom of the multi-trillion dollar flood of “stimulus.”)

All that said, I’m glad to see the back of the Bush administration. I hope that the Obama team and the new Congress will not prove to be worse. We’ll see.

As for me, it’s back to work to promote individual liberty and limited government. With Bush out of office, I’m actually just a bit more optimistic, despite my fears about the escalating bidding war on the size of a counter-productive “stimulus” and the unlikelihood of any serious changes to the US’s counter-productive policies of foreign interventionism.

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