Wednesday, February 11, 2009

Cato's Retort

Obama made the claim that:
There is no disagreement that we need action by our government, a recovery plan
that will help to jumpstart the economy

To this, the libertarian think tank The Cato Institute created a full-page newspaper ad that ran in several papers, including the NY Times. The ad preceded the Obama press conference by several days. The ad begins:
With all due respect Mr. President, that is not true.

Notwithstanding reports that all economists are now Keynesians and that we all support a big increase in the burden of government, we the undersigned do not believe that more government spending is a way to improve economic performance. More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930s. More government spending did not solve Japan’s “lost decade” in the 1990s. As such, it is a triumph of hope over experience to believe that more government spending will help the U.S. today. To improve the economy, policymakers should focus on reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth.

Then followed the names of 200+ economists who signed on, including Nobel Laureates. A second edition of the ad was created, because more than 100 other economists also wished to sign on.

So, I tend to think that Obama probably was speaking very specifically to libertarians when he marginalized those who would prefer no or little action as better than the deleterious 'stimulus'.

Indiana economists Cecil Bohanon and Courtenay Stone (both of Ball State) and Eric Schansberg (Indiana Southern Univ) are among the signers.

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