Don Boudreaux

George Mason University economics professor Don Boudreaux offered a grim assessment of the economic stimulus package that’s making its way through Capitol Hill, questioning President Barack Obama’s contention that government must do something.

“Conventional wisdom in Washington is that we must do something regardless of how wise or prudent it is,” said Boudreaux, the keynote speaker at an economic recovery event cosponsored by Heritage and the Club for Growth. “It’s taken as a matter of course that we must spend wildly.”

Instead, Boudreaux said, history offers a lesson that shows massive spending programs, such as those advocated by President Franklin Delano Roosevelt as part of the New Deal, do not work.

“FDR’s policies put the ‘great’ in Great Depression,” Boudreaux said. He cited unemployment, which never dipped below 14%, and comments made by FDR’s own treasury secretary, Henry Morgenthau, who lamented that spending didn’t work.

Should the United States fall into a deeper recession or depression, Boudreaux said, it would be the result of economic policies like those Obama is pursuing as part of his stimulus proposal.

Boudreaux, a popular economics blogger at Cafe Hayek, asked attendees to put the current fiscal problems in perspective. He reminded them that unemployment was 7.6% in 1992 — the same as today. And he joked that he had food in his refrigerator that was older than when the current recession began in December 2007.

Boudreaux outlined these three objectives:

  1. Even if the economic situation is the worst in our lifetime, it doesn’t follow as a logical necessity that government must take action through a massive spending program.
  2. Washington is not a city known for principles. Raw politics and personal agendas will always dominate any legislation, including the current stimulus.
  3. Now is not the time to lose trust in markets; America needs them more than ever. He encouraged lawmakers to rejuvenate the economy by lowering taxes and reducing regulations.

For more coverage of the event, see these Foundry posts from earlier today: