Barack Obama wants to use the recession to remake the U.S. economy. "Painful crisis also provides us with an opportunity to transform our economy to improve the lives of ordinary people," Obama said.
His designated chief of staff, Rahm Emanuel, is more direct: "You never want a serious crisis to go to waste."
So they will "transform our economy." Obama's nearly trillion-dollar plan will not merely repair bridges, fill potholes and fix up schools; it will also impose a utopian vision based on the belief that an economy is a thing to be planned from above. But this is an arrogant conceit. No one can possibly know enough to redesign something as complex as "an economy," which really is people engaging in exchanges to achieve their goals. Planning it means planning them.
Obama and Emanuel want us to believe that their blueprint for reform will bring recovery from the recession. Yet we have recovered from past recessions without undertaking a radical social and economic transformation.
In fact, reform would impede recovery.
This is not the first time a president chose reform over recovery. Franklin Roosevelt did it with his New Deal, and the result was long years of depression and deprivation. Roosevelt's priorities were criticized not just by opponents of big government but by none other than John Maynard Keynes, the British economist whose theories rationalized big government. Before FDR had been in office a year, Keynes wrote him an open letter, which was printed in The New York Times:
"You are engaged on a double task, Recovery and Reform; -- recovery from the slump and the passage of those business and social reforms which are long overdue. For the first, speed and quick results are essential. The second may be urgent, too; but haste will be injurious. ... [E]ven wise and necessary Reform may, in some respects, impede and complicate Recovery. For it will upset the confidence of the business world and weaken their existing motives to action. ... Now I am not clear, looking back over the last nine months, that the order of urgency between measures of Recovery and measures of Reform has been duly observed, or that the latter has not sometimes been mistaken for the former."