Stimulus: A Clash of Faith

These days we live in an age of reason. Everyone claims that their ideas about politics and economics are driven by reason and science.

But that is wrong. We live in an age of faith, an age of faith in science. Everything comes down to faith.

And that goes for economics too.

The “stimulus” bill that President Obama is signing today is an act of faith. Ever since the late 19th century a large group of the western elite has believed that capitalism is inherently unstable, and can only succeed if minutely regulated by large-minded people like themselves. We generally call these people liberals or progressives.

Against this movement is another group and another belief system, one that we call the conservative movement. It believes that by and large, if framed by appropriate laws, the free market economy can run itself subject to the fluctuations of the business cycle, and that the interventions of large-minded people usually make things worse.

In the Reagan-Bush era conservatives believe that we made the point pretty clearly that a regime of stable regulation of business, a sensible and simple tax regime, and a level playing field is the best approach to political economy.

But our liberal friends hated every moment of this period. Because their faith says that you need people like them to help the helpless. If you don’t have minute regulation of the workplace, they say, people will be brutally exploited. If you don’t give targeted groups a helping hand then these traditionally marginalized groups will never succeed in reaching the mainstream of American life.

Arguments like this don’t get settled over the dinner table. They are fundamental arguments of faith, and only the clearest and most brutal experience will ever change minds.

In my view the present “stimulus” bill is the Last Hurrah of the interventionist faith. After the Obama era is over, there will be a lot fewer people that believe in government intervention to fix the economy.

The argument against the liberal faith has been developed by many people over the years, most notably by F.A. Hayek, who argued that the “man in Whitehall” or Washington just could not know enough to regulate an economy. It has been most powerfully made by the disastrous economic record of socialism and communism (and in a short while by the Bolivarian Revolution in Venezuela).

But our liberal friends can’t bring themselves to abandon their faith in their own ability to create a better world through detailed and comprehensive government administrative programs. And so we are going to have to descend into the pit before we will get to junk their whole cruel, corrupt, wasteful, unjust, and deluded welfare state.