Bad ideas in good times have become good ideas for bad times. We are told that we must constantly have stimulus programs to "jump start" the economy so that it can return to its productive ways. But what we get are "cash for clunkers," short-term subsidies to new home buyers, extended unemployment benefits, and an endless set of home loan forgiveness and loan extension programs that never quite allow underwater homeowners to return to dry land.
At the monetary level, we get a Federal Reserve determined to drive the interest rates as close to zero as it can, and when that fails to gain traction, a spiffy program of quantitative easing, which is intended to inject more money into the economy, to no real effect. Then there are our extensive new programs for health and finance whose contours no one can quite understand. And throughout it all, our leaders lamely proclaim that it is just bad luck, not unsound policies, that leave us mired in the muck.
These clever ideas and new programs never seem to work as advertised. So right now, the smart money predicts a double-dip recession in which unemployment rates will continue to hover around 9 percent. […]
The dominant response from too many political elites is to double-down on the same flawed policies. The failure of ad hoc interventions is treated as proof that half-hearted programs never can achieve success. And so certain politicians and policy makers argue that we must continue on the same doomed course of action. The Obama administration thinks that no evidence can falsify its jaundiced view of the world. […]
We will know that this administration is intent on reversing the decline when the word "deregulation" passes approvingly from its lips. Until that time, we should expect to see housing, labor, and financial markets remain in the doldrums.