The Good Doc frequently states that government can't manage the economy. In the past he even opined that the economy was independent of government action and that it simply performed however it performed. I have stated that this is silly and uninformed. In fact, the government has been "managing" the economy since at least the New Deal. It is one of government's primary responsibilities.
We live in a Keynesian world. What nation eschews "management" of their economy? We all have central banks running monetary policy that are knee deep in their respective economies. Our governments "manage" the fiscal environment through tax and spending policy. The rules of the road - the laws and regulatory regime have a significant impact on a modern economy.
That doesn't mean that one can't advocate a true Laissez-faire, Libertarian approach to governance. Ron Paul does just that. However, doing so is rather radical and there is not a developed industrial economy that chooses that model. In fact, I don't think there is a seated political party in the world suggesting such an anachronistic, short sighted policy.
So - one might say government shouldn't manage the economy, but they shouldn't say government can't. They would be manifestly wrong. Our governments have been doing it for generations.
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As the great Henry Hazlitt wrote in 1946 about such spending: "For every public job created ... a private job has been destroyed somewhere else." Government can point to jobs it says it "created," but it's hard to show someone a job that wasn't created in the private sector because the money was spent by government.
In the end, the debate really isn't about economics at all. As Arthur Brooks, president of the American Enterprise Institute, recently wrote, it's all part of a much greater debate — "a moral struggle currently being played out over the free enterprise system: Will we strengthen freedom, individual opportunity and enterprise? Or will we expand the role of the state and its power?"
IBD
Herbert Hoover couldn't have said it better himself.
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