The Corner

First, Do No Harm

It’s becoming increasingly clear that this recession is different. An economic contraction after a financial panic is a wealth recession, not an income recession. Households and businesses had borrowed too much money, acting as if they were richer they really were. The de-leveraging necessary to restore a sound economy, however much we and the politicians who appeal to us would like it to be otherwise, will be a slow process. All of the public policy ideas that want to hasten this re-set, like stimulus packages, require the federal government to offset the de-leveraging of private enterprises and citizens by leveraging its own sovereignty more and more aggressively.

It’s pretty clear that isn’t going to work politically, since Americans are growing more and more apprehensive about federal deficits already scheduled to be very large because of the baby boomers’ retirements. It may also be counterproductive economically, since the idea that the federal government can and should borrow as much as it wants as long as someone is willing to lend, puts the full faith and credit of the U.S. government at risk, or at least in play. Fixing the economy with more government borrowing is reassuring — until it isn’t. When financial markets get the faintest idea that sovereign debt is also a heavier load resting on thinner ice, the panic can spread very quickly.

Every problem is a nail when your only tool is a hammer. The Obama administration did not want to let the economic crisis it walked into after the 2008 election go to waste, and it used classic Keynesian policies to restore aggregate demand . . . and sweep in as many items that had been languishing for decades on the Democratic party’s to-do list as it could. The arguments that we would be better off now if the 2009 stimulus had been much bigger refuse to acknowledge the possibility that the unique features of our current economic situation have rendered such initiatives expensive irrelevancies. There may not be policy measures available that substantially improve our economic situation or hasten our recovery. The overarching policy imperative is to do no harm, to avoid mistakes that make a slow recovery even slower or more uncertain.

William Voegeli is a visiting scholar at the Henry Salvatori Center at Claremont McKenna College and author of Never Enough: America’s Limitless Welfare State.

Most Popular


The Gun-Control Debate Could Break America

Last night, the nation witnessed what looked a lot like an extended version of the famous “two minutes hate” from George Orwell’s novel 1984. During a CNN town hall on gun control, a furious crowd of Americans jeered at two conservatives, Marco Rubio and Dana Loesch, who stood in defense of the Second ... Read More

Billy Graham: Neither Prophet nor Theologian

Asked in 1972 if he believed in miracles, Billy Graham answered: Yes, Jesus performed some and there are many "miracles around us today, including television and airplanes." Graham was no theologian. Neither was he a prophet. Jesus said "a prophet hath no honor in his own country." Prophets take adversarial ... Read More
Film & TV

Why We Can’t Have Wakanda

SPOILERS AHEAD Black Panther is a really good movie that lives up to the hype in just about every way. Surely someone at Marvel Studios had an early doubt, reading the script and thinking: “Wait, we’re going to have hundreds of African warriors in brightly colored tribal garb, using ancient weapons, ... Read More
Law & the Courts

Obstruction Confusions

In his Lawfare critique of one of my several columns about the purported obstruction case against President Trump, Gabriel Schoenfeld loses me — as I suspect he will lose others — when he says of himself, “I do not think I am Trump-deranged.” Gabe graciously expresses fondness for me, and the feeling is ... Read More