We are in what might be called the Great Freakout of 2008.
The Federal Reserve is a hair's breadth from pushing interest rates to zero percent. After that, all that's left is offering a free set of steak knives with every bag of cash. We're moving quickly toward nationalizing the domestic auto industry, fast on the heels of partially nationalizing banking. The outgoing Bush administration is having a clearance sale on its few remaining items of fiscal restraint, while the incoming Obama crew is promising infrastructure "investments" the likes of which we haven't seen since the 1950s.
Meanwhile, journalistic Brahmins, who last year would have spontaneously combusted at any hint of government meddling in the Fourth Estate, now openly debate whether we should revive the Federal Writers' Project to give jobs to scribes thrown out in the cold by newspaper downsizing.
The freakout is understandable. Economic trust is breaking down. Investors are buying Treasury bills that pay no interest because they're scared to leave their money even in insured banks. Consumer spending has dropped off a cliff. Some analysts forecast that the GDP will fall at an annualized rate of 8 percent for the fourth quarter. Soon you'll be able to pay for a Cadillac with chickens.
But here's a point nearly everyone understands from personal experience: It is not a good idea to make big, life-altering decisions when you're freaking out.
Everyone's had moments when everything appears to be falling apart. (If you haven't, here's a heads-up: You're long overdue.) And these are precisely the moments when we should take a walk around the block. After all, we adopt healthy habits and strong principles because we trust that they will minimize chaos and misery in our lives. The inevitable crises don't call for trading that course for eternal panic.
The same holds true with public policy. George W. Bush's harshest critics certainly understood this point when it came to 9/11. Their narrative holds that the Bush administration and its enablers, driven mad by 9/11, made wholesale changes to our constitutional order in the name of an elusive "security" that were unwarranted, counterproductive and immoral. I think that story is itself a kind of freakout -- for instance, I don't think the Patriot Act was overkill -- but anyone who has dealt with the absurdities of air travel in recent years knows the drawbacks of policy by freakout.
But now that we have the equivalent of an economic 9/11, much of the same crowd sees its chance to lock in ideas that would be unthinkable during saner times, this time in the name of "economic security." As Rahm Emanuel, President-elect Barack Obama's incoming chief of staff, said last month, "You never want a serious crisis to go to waste; it's an opportunity to do important things that you would otherwise avoid."
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