The Great Depression Reenactor

Having done all she can to bring about a country-wide reenactment of the Great Depression, President Obama's chairman of the Council of Economic Advisors, Christina Romer, is stepping down. Following the standard doctrine of politicized, progressive economists, she believes that heavy government intervention saved the country from the Great Depression, and she relied on that "expertise" in her position for the past year and a half.
Among her challenges was explaining why her prediction that the Obama-backed fiscal stimulus would keep the unemployment rate below 8% proved overly optimistic. The unemployment rate is now at 9.5%.

"I certainly hoped it would be lower," she said. "The world deteriorated between November 2008 when I started" and the initial estimates were made "and when we took office January 21. Do I wake up every morning and wish it were 8% instead of 9.5%? You bet."
Well, as least she hoped it would be better. But it's not her fault, you see? The "world deteriorated!" "I'm not to blame! It's not my fault!" (Is that Dr. Robert Stadler or James Taggart -- or both -- from Atlas Shrugged?)

I wrote about Romer in November 2008 when she was first picked to lead the Council. I quoted the following passage from a Boston Globe article:
The lesson she drew from that crisis, according to colleagues and a review of her writings, is that strong government intervention is sometimes necessary medicine. That may mean she will urge Obama to act aggressively to keep capital flowing through the financial system and to enact an economic stimulus package that injects government spending into the economy at the risk of ballooning the deficit.
See my post for Henry Hazlitt's take on how well that worked when FDR did it. Similar policies threw the country into deeper depression which only relaxed when FDR (and the Supreme Court) finally lifted the boot from the neck of American business.

And yet, after seeing the failure of her policies -- even though she wishes! for lower unemployment -- Romer did, in fact, learn something new:
Where we are today is certainly not good. But in the absence of the actions [of the government --ed.] the economy would have been even more terrible."

One thing she says she hadn't realized previously: "The degree to which you often only get one shot at something like the Recovery Act."
See? She learned that as bad as things are, it would have been worse without her. What evidence does she have for that? To quote a favorite phrase of Ayn Rand's, "blank out."

Romer only got "one shot" and it was right on target. She hit America in the jugular and we've been hemorrhaging red ink ever since.


Steve D said...

“The "world deteriorated!" "I'm not to blame!”

I’ve said this before; the proper comparison is not between then and now. The proper comparison (or experiment) is between a world in which the policy was implemented vs. a world in which the policy was not implemented.

In the absence of a system or laboratory for actually running this experiment we need other methods. One way would be to look at similar countries which differed in how aggressively their governments intervened. The other method used by Henry Hazlitt would be to use inductive methods to generate economic principles and then apply it to the specific situation allowing him to see the unseen, so to speak.

Just making random statements like Romer is doing proves nothing.

Anonymous said...

Romer splashed on the political scene displaying the most affect inappropriate behavior I have ever seen out side of a phsych ward. Honestly, she could tell you the American economy just crashed, then look into the camera with a conjugate gaze and smile. She can take her pragmatism and her keynesian economics back to the ivory halls of academia where she belongs, leaving public office the same way she arrived:with that shit eating grin on her face.

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