“Hope Is Not a Policy”
So says National Review’s Kevin Williamson about planning for and predicting economic growth. Williamson’s column was a riposte to Forbes magazine’s Ralph Benko, who criticized Williamson as a “Prosperity Denier.” Why? Williamson had told Larry Kudlow on CNBC that the expectation, or hope, that real national economic growth will rise from 2 percent to 5 percent was “a plan for magic unicorns.” (I should note, however, that even if magic unicorns existed, we probably shouldn’t trust them, or their plans.)
Williamson summarizes his Kudlow exchange thusly (emphasis added):
Jack up economic growth, Mr. Kudlow argues, and all this budget-balancing stuff gets easier. Not so fast, says I. If we had the ability to know in advance how much growth particular economic policies would produce — or even whether they would produce growth at all — then we would never have a recession. We would always be at the sweet spot of maximum real growth. But we are limited and fallible creatures, and right-wing political macroeconomic management is no more reliable, or predictable in its outcomes, than is Keynesian political macroeconomic management. The economy is not a machine, and any time a politician says, “If we will adopt Policy X, we are sure to achieve Statistical Abstraction Y,” he is talking through his hat. The best government can do is maintain stable rules and liberal institutions and try to stay out of the way.
Williamson is right on. The moment a politician thinks she can plan an economy is probably the moment she should no longer be presiding over it, and when your own politicians start talking up “economic multipliers” and “potential demand,” hold on to your pocketbooks, ’cause you’re about to be brought into a massive and expensive public experiment.
Or, put more succinctly, be very skeptical of the promises of economic growth that politicians make to you. Whether it’s magic unicorns or flying cows, hitching your fiscal destiny to the spirits of animal fiction is a plan for frustration, not a plan for the future.
