I have my views on government and items such as the Stimulus Bill (hated it). However, it is usually just gut feel, because for most issues I don’t know enough to have much more than principle-based opinions.
However, Tom Evslin is an expert, and is blogging about what he learned as Vermont’s “Stimulus czar” or Chief Recovery Officer. Below are some notes from Tom’s post “Confessions of a Stimulator”, which was also published in the Wall Street Journal. Read Tom’s blog for far more insight.
I highlighted Tom’s thoughts on aspects of Stimulus that I felt (but didn’t know) were problematic, however Tom also points out (in this post and others) that some aspects were beneficial, and that not all the problems were due to the federal government itself.
Tom’s words are in blockquotes; take those as insight from an expert. My summaries introduce each set of quotes; take those as simplified and subjective.
Dangers of high govt spending (including grants, tax credits etc) and why govt spending is often inefficient and comes with opportunity costs:
When government overreaches, both the economy and the fabric of society suffer….during stimulus the government share of the economy grew from 37% to 44%. In 2000, it was only 32.5%. The only time government expenditures have been this high as a percentage of gross national product was at the end of the Second World War. We can and must cut these expenditures in order to grow the economy as a whole.
Although Vermont did better than many other states, too much of the money ended up continuing bloated programs rather than providing a transition to a sustainable future
Moreover, private investment in [broadband and energy], which might have happened even during the recession, dried up as companies waited to see if they (or their competitors) could build with government money. Government grants to business – whether part of Stimulus or not – have turned too much of the creative energy of American business from innovation to grant-grubbing and lobbying.
Dangers of adding regulation to regulation; also an issue with Net Neutrality IMO:
Nothing is “shovel ready” in the United States; we’ve created a wall of regulatory obstacles that make it impossible to do any major project within a reasonable or even predictable period of time…If regulation were made reasonable and predictable, we wouldn’t need government money to have a construction boom. Under the current system, not even all the King’s men with all the people’s money can build anything significant.
Unintended consequences (see also corny ethanol) and/or lack of foresight:
An industrial policy based on government grants and tax credits is an oxymoron at best and a disaster at worst. As an example, tax credits for solar photovoltaic have stimulated the solar industry in China (they don’t install solar panels there; they just sell them to us) AND increased the cost of energy in the US.