Upside Down Economics (Thomas Sowell) “From television specials to newspaper editorials, the media are pushing the idea that current economic problems were caused by the market and that only the government can rescue us. … What was lacking in the housing market, they say, was government regulation of the market’s ‘greed.’ That makes great moral melodrama, but it turns the facts upside down. … It was precisely government intervention which turned a thriving industry into a basket case.” Sowell goes on to explain how the Community Reinvestment Act of 1977, not really enforced until the Clinton Administration, is responsible for the housing crisis.
Patton Boggs LLP has a detailed analysis of the recently-signed stimulus package available for download at its site. “Implementation of the massive stimulus package must be carried out by a myriad of Federal, State and local government entities on a severely accelerated timetable. The distribution of funding often involves new grant programs, programs that are parallel to existing funding mechanisms, new regulatory standards, and an array of bureaucratic issues. Moreover, although the money will be awarded quickly, with little initial oversight, during the next few years there will be close scrutiny by Congress and various agency Inspectors General of how the money is distributed and whether it is spent wisely and fairly.” Watch out, I say.
Rebuilding America’s Job Machine “Industrial policy isn’t dead. It’s thriving in the states—and may be the start of a U.S. comeback strategy,” according to BusinesWeek. At least this article sounds a few notes of caution: “Mixing taxpayer money and private industry is risky, of course. Public officials can be bad at picking winners. State intervention can lead to cronyism and market distortion. … These are some reasons Harvard Business School competitiveness guru Michael E. Porter preaches caution. ‘The grassroots model, where regions get on with it without waiting for Washington, is one of America’s great strengths,’ Porter says. But he calls many state interventions unrealistic. ‘Subsidies are usually a sign you have no underlying advantage in an industry.’
What’s in the Stimulus Bill for You (New York Times) “All the talk the last couple of days about the stimulus bill was about compromise and slimming down. What is left, though, is a huge spending bill, with well over $100 billion in tax breaks and handouts for individuals.”
Terrible Credit Crunch of 2008 — The Greatest Hoax of All Time? (Robert Higgs, The Independent Institute) Was there a credit crunch last year? Is it still going on? Robert Higgs presents evidence based on Federal Reserve System statistics.