Much ink has been spilled on the small size of President Obama's latest stimulus package - roughly $450 billion - relative to the size of the overall U.S. economy - roughly $15 trillion. But size is not the problem. The president isn't doing too little to help the economy recover. He is trying to do far too much to put his personal stamp on a recovery we have yet to see. And that's exactly why we have yet to see it.
Capitalism begins with humility. If that statement surprises you, then too much of your economic education has come from Hollywood. Unlike all other competing economic systems, capitalism is primarily concerned with process, not outcomes. The main objective of socialism, communism and their variants is a certain distribution of resources. It's a rationally conceived objective whose realization requires a rational plan and hence, a rational planner. That's where the state comes in.
Capitalism doesn't ignore the question of the distribution of goods and services. But it does recognize how little we know about what future generations might be able to distribute. Pick any modern medicine, go back 100 years and you will see that nobody was concerned with its distribution because nobody knew the treatment was even possible. No matter how rational the planner, he simply cannot plan what he does not know.
Instead of focusing on distribution, capitalism focuses on creating an environment in which we stand the best chance of realizing an unknown future quickly. That requires giving as many people as possible as much room as possible to try as many new things as possible. It's a process fraught with failure and frustration, and the outcomes are largely unpredictable. But capitalism turns out to be pretty good at helping us discover what's next. And it's proven much more effective than competing systems at solving the distribution problem. Even if we can't decide who gets what share, more of everything has usually meant more for everyone.
Mr. Obama positions his latest economic recovery plan not as an alternative to capitalist enterprise, but as a way for the government to "help" it along. What he fails to recognize is that every choice the government makes to help one constituency is a choice to constrain another. Someone has to pay for stimulus spending. That might not be a problem if you take the money from people who are using it unproductively and give it to people who will use it more productively. But neither Mr. Obama nor anybody else knows exactly who these people are. That means we must take the money indiscriminately or target some particular group based on "fairness." This group often turns out to be the "rich," whose primary qualification for being taxed more is their success in using money productively. And we must spend the money not on projects that are known to be the most valuable but on those that are most readily identifiable or politically useful. Hence, the president's insistence on more bridges, roads, schools and green initiatives.
The more Mr. Obama tries to "help" the economy, the more he constrains opportunities for those who fall outside of his policy priorities. If the last 2 1/2 years are any indication, that's a big group of people whose ideas and creativity we could sorely use. America doesn't need an Obama recovery. We need a recovery. The less the president tries to "help," the faster we will get there.
Brian Brenberg is an assistant professor of business and economics at The King's College, New York.
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