8.08.2011

Christina Romer: Old Dog, Old Tricks

Almost exactly a year ago, I wrote a post called "The Great Depression Reenactor" about former White House Economic Adviser and noted Great Depression "expert," Christina Romer. The gist of the post was that, despite the evidence to the contrary, she was still clinging to her failed Keynesian policies, wishing that unemployment was lower but still happy that they were able to get some stimulus into the economy.

Now that it's been another year and the unemployment rate is still above 9%, the US credit rating was downgraded, we appear to be headed for a double-dip recession, stocks are poised for another sell-off after a horrific week last week, and gold is up over $1700/ounce, do you think she's learned her lesson?

Fat face chance.

Now she's on Bill Maher's show (watch the 6 minute video) joking that we're "darned fucked," and lamenting that the stimulus wasn't big enough.

See, she's an expert, if you didn't know, and she teaches that government spending drives recovery. It's in all the textbooks, she says, and she teaches that to the undergrads because she teaches the "truth." Both don't worry. She says the empirical evidence "is definitely there," and to those who disagree, her thoughts are "that people wanna say that the sky is green."

In a humorous exchange -- though not for the reasons they suspect -- Maher compares her to a climate scientist in that they both "know real things that you study at a college," but the "stupid people" keep getting in the way. He suggests that people who disagree must have been "Palinized" and he asks, "isn't it frustrating when the people who don't know things about the subject you're so well versed in, get an equal vote in the debate?"

Of course, she agreed.

Now, it's easy for Maher to lump free market proponents into the Palin camp (note: this is no defense of that theocrat, Palin) because that's the same way he deals with climate change "deniers": ad hominem, insults, and mockery. Yet, his comparison of Romer to the climate change alarmists is quite apt, for one, because Romer sticks to the conventional wisdom despite the evidence staring her in the face, and for another, because the proposed solutions always entail a drastic attack on individual rights.

It would be interesting to see Maher or Romer debate the issues with a free market proponent from an earlier time, one who lived through the Great Depression. This is what Henry Hazlitt said about FDR's policies -- the ones that Romer idolizes so (quoted by Jeffry Tucker, writing for the Ludwig von Mises Institute in 1993):
Most importantly, he blamed the "artificial cheap-money policy pursued both in England and America, leading here to a colossal real-estate and stock-market speculation under the benign encouragement of Messrs. Coolidge and Mellon." This malinvestment, caused by inflationary policies, created distortions in the capital stock which called for correction.
I quoted that passage in an article on Romer in November, 2008, just after she was picked by Obama to lead his Council of Economic Advisers. Back then, she was salivating at having a chance to one-up FDR in the application of Keynesian stimulus.

Let's be thankful that she was frustrated by the stupid people, at least a little bit. And let's hope that her brethren in the administration currently will be similarly frustrated in their attempts at a third round of cheap-money policy, QE3.

4 comments:

Jenn Casey said...

Well I certainly agree with Maher in that it's DAMN frustrating that people who don't know $%^& about $%^& get a say in what happens. Sadly, those are the people who think they know it all and are in power.

:(

C. August said...

Romer is practically Krugman-esque in clinging to her interventionist ideals. It's really quite astounding.

mattbarrow said...

"Real" as in the FACT that stimulus, rather than having a 1.5 multiplier (per Romer), has a .57 reduction in output?

C. August said...

Matt, stop clouding the debate with facts and reason and outmoded things like that. Romer is trying to help the little guy, here! Have you no compassion?