…to balance the humors of the economy:

The Keynesian idea of stimulus has no empirical basis, but the only active tool the government has in a time of economic downturn is its ability to borrow and spend. Surprise, surprise: during the Great Depression, governments fell all over themselves to embrace Keynes’s idea of borrowing and spending to “stimulate” the economy. They did so not because it was proven to work (then or since) but because it justified the one action that would make the government larger and more powerful and the political class larger and more powerful as well.

The Fed is now doing the same thing with inflation “Quantitative Easing”. There is no particular reason to believe that inflating the money supply will produce more real economic activity, indeed the history of the 20th century proves exactly the opposite. However, it is all the Fed can do right now so it is going to grab a convenient theory to justify inflating the currency.

For centuries, doctors tortured and killed their patients because neither they nor their patients had the courage to simply admit that there was little good the doctors could do. They created elaborate and detailed theories to justify their counterproductive interventions. Worse, after a time, everyone, doctors, patients, philosophers, proto-scientists, etc. all came to regard the tool driven rationalizations as facts. Not until the discovery of the germ theory of disease, quantitative chemistry and a general science of diagnostics did the nonsense theory of humors fade away. The invention of new tools drove the development of new, scientific theories.

We are doing the same damn thing with the current economic travails. Rather than admit there is little that the government can do to correct its colossal real-estate screwup, we get to witness the economic equivalent of bleeding and induced vomiting all based on a economic theories that have no other reason for existing that to justify the government bleeding and inducing vomiting in the economy.

“… but it’s what can be done,” could well be one of the most dangerous phrases in the English language. In very many cases, not just economics, the best thing to do is nothing. For any particular bad circumstance, there are near infinite number of actions that can make the circumstance worse but only a very few that can make it better. Indeed, there is no natural law that says that every circumstance can be improved with the capabilities at hand. Sometimes a “can do spirit” backfires. Some circumstances are like earthquakes or tornadoes: you can’t stop them, you just have to ride them out.

Don’t just do something; stand there.

…from people who think they’re saving Hayek.

Actually, I don’t think that even they think that’s what they’re trying to do.

I agree with Clark Lindsey’s post title on the stunningly stupid news that the Deficit Commission has recommended axing Commercial Crew, except it will end up costing a lot more than ten billion. It’s pretty clear from the announcement that they don’t even understand the purpose, and that it would save NASA billions. In fact, they are unwittingly recommending ending NASA human spaceflight, and consigning us to continuing to be held hostage by the Russians for years. More thoughts later, here or elsewhere. All of the nonsense about this in the media over the past many months hasn’t helped, of course.

[Evening update on the Left Coast]

I have more extensive thoughts over at National Review On-Line.

Privatizing liquor would increase revenue and decrease consumer costs, but it would result in government layoffs:

As I noted in August, privatization advocates also have been known to argue, with a logic familiar to fans and foes of President Obama’s stimulus package, that the business of distributing alcoholic beverages should be designed to maximize jobs—i.e., to be as inefficient as possible.

Why do we have to be ruled by economic ignorami? And why is it that only places like Reason point things like this out? Why can’t the lame-stream media think, just a little, when they report this stuff?

I’m pretty much on the same page as Jonathan Adler:

Hendricks’ effort to scare conservatives into supporting big government now to avoid bigger government later rings particularly hollow. Why is it that everything requires bigger government? Climate change is a threat? Extend government tentacles throughout the economy. Climate change is already happening? Ditto. Adaptation is necessary? More of the same. Were climate change not happening at all, I suspect Hendricks would still endorse a substantial expansion in government power.

Admittedly some on the right are equally reflexive, assert government is never the answer, and go to lengths to deny climate change poses any threat whatsoever. Yet there are also plenty of conservatives and libertarians who are deeply skeptical of government intervention, but are nonetheless willing to believe global warming might be a problem. It’s perfectly reasonable to believe that reducing greenhouse gas emissions does not require the enactment of monstrous, pork-laden, regulatory statutes like Waxman-Markey. And it’s not at all clear that climate adaptation necessitates a massive expansion of government power. In many areas, such as water, climate adaptation requires more reliance on markets, not less. Climatopolis author Matthew Kahn also blogged here about how successful climate adaptation will be driven by market forces, not government planners.

I share Hendricks’ and Farber’s frustration that more conservatives don’t take climate change or other environmental concerns seriously. But I also believe some of this is the environmentalist movement’s own doing. If everything calls for the same big government solution, why does it matter what the problem is?

Concern about the environment has always been hijacked by socialists, going all the way back to the early “progressive” movement, and the trend just got worse with the end of the Cold War, and socialism discredited, after which they changed brands and became watermelons. Policy has to be based on a rational calculation of the costs and benefits, rather than simply using every perceived crisis as an excuse for further accumulation of government power.