Stimulus Spending: We’ve Gotta Do Something! by Michael Munger, Foundation For Economic Education
Shamans of old knew they could bend the credulous to their will (and make a boatload of money) if the shaman could predict something like a storm, or an eclipse. “This very evening, the Night Wolf will devour the Moon Virgin! But if you pay me many coins of silver, I will force Night Wolf to cough the Moon Virgin back up, unharmed!”
Humorist and author P.J. O’Rourke used a version of that story 20 years ago, in All the Trouble in the World, to describe fundraising letters from Greenpeace to help solve global warming. But everyone does it now: just substitute global warming, or terrorism, as the problem, and propose a magical solution so that people will give you their money (or their vote).
Parsing this as if it were logical, the argument goes like this:
- X is a problem.
- We should do something
- Z is something.
- Therefore, we should do Z.
- If Z does not solve X, it must mean we didn’t do enough Z, and we need to do more.
- If you disagree that we should do more Z, you actually favor X, or else you hate the people suffering from X.
Imagine you have a six-year-old daughter and that she has “nervous fever,” today known as typhoid. It’s 1755, and we don’t yet understand germs or fevers very well. Still, you love your daughter, and you can’t just sit around. You call the doctor.
Now, if the doctor were honest, he would say, “We don’t know much about fevers. It’s better if we just try to make her comfortable, cool her head with compresses, and let this run its course.” But if he said that, he would be soon be an ex-doctor. You are scared, so you want him to do something.
That something in 1755 was a combination of bleeding and a glyster. A glyster involved the introduction of that new wonder drug, tobacco, into the lower bowel because the medicos thought the tobacco would be absorbed faster that way, alleviating the pain more quickly. Yes, that means exactly what you think it means: The doctor used a bellows to blow smoke up the patient’s… well, you know.
Then the doctor — the one you hired because he promised to do something — takes out a lancet, and makes a small incision in your daughter’s wrist. The theory was that the fever was in the blood itself, and bleeding was the only treatment doctors knew, other than the tobacco smoke thing.
Of course, your daughter doesn’t get better; she gets worse. Your daughter’s fever is still very high, so the earnest quack takes another half-pint of blood. And another.
Then she dies. And then you blame the doctor, and he blames himself. For not having bled her enough.
What does this story have to do with shamans, fundraising, and contemporary problems? In all of these cases, someone promises to do something to solve a (seemingly) pressing problem.
Just read an article by Paul Krugman. It doesn’t matter which one; every op-ed Dr. Krugman has ever written follows exactly the same formula. Unemployment is a problem. We should do something. Stimulus spending (or a fake alien invasion) is something. We should try massive amounts of stimulus spending.
If we try it, and it doesn’t work, we didn’t do enough. And if you object that “stimulus spending” is dumb, and that the multiplier theory is little better than a theory of fevers based on bleeding out poisonous “humors”, then you just hate unemployed people! (I have gotten that reaction, verbatim, from people at dinner parties.)
And that’s hardly the only example. Poverty is a problem in Africa. We should do something. Foreign assistance, based on huge construction projects, is something. We should build dams and roads. When it doesn’t work, it’s because we didn’t spend enough. What if you object, as New York University economist Dr. Bill Easterly has done repeatedly, that this solution makes things worse by destroying local business and creating a dependency on aid? You are told that you just hate poor people in Africa.
An interesting recent example is the “reform” of restaurant menus. The problem is obesity (we are told it’s an “epidemic,” though it is not communicable!). We should do something. Requiring expensive reprinting of all menus and food listings to require calorie counts is something.
But it turns out that these expensive and cumbersome labeling requirements had no measurable effect. If you point that out, you’ll be told you hate poor people, or obese people, or the Moon Virgin.
And so on. We haven’t really come so far since the 18th century. We have about the same level of understanding of macroeconomic policy problems now that doctors had about fevers then. The best we can hope for is that the “treatment” will fail to kill the patient outright. Given our lack of understanding, the best thing to do is often nothing — other than try to make the symptoms a little less painful.
But then what is the solution? Don’t focus so much on the fact that the proposed solution won’t work. Instead, grant the premise: “Yes, X (poverty, unemployment, poor education) is a problem, you are right. We agree about that. But I think that your solution will do more harm than good. If you really want to solve Problem X, research has shown that we should [Y].”
Of course, that means you’ll need to have researched the problem yourself. You’ll need examples of how increased liberty, access to markets, and respect for the autonomy and dignity of human beings can actually work.
The point is that you have to avoid getting stuck debating their policy solutions. Instead, you’ll need to provide solutions of your own, emphasizing the efficacy of free markets and liberty in eradicating social ills.
In my next blog post, I’ll try to give some examples. But in the meantime, the thing to remember is this: Stop attacking the dumb solution. Grant the premise that X is a problem. And then change the subject to your solution. You’ll actually persuade a lot more people with that approach.