Mercatus on the Bailout
In a February 25, 2009 Forbes magazine article, Garett Jones and Dan Rothschild of the Mercatus Center at George Mason University parallel the inadequacy of federal efforts following Hurricane Katrina in 2005 with President Obama’s bailout projects of today. Despite the differences between the causes and natures of these disasters, the piece offers one striking similarity: the response by the federal government:
“…Washington used a similar recipe to respond to both crises: create programs that quickly shift from one purpose to another, mix with complete opacity in the policymaking process and add some frequent and seismic shifts in what economists call the rules of the game. The result is quite predictable: A bad situation that grows much, much worse.”
The authors explain that both the Road Home Program and the Financial Stability Plan “favor stability over progress and predictable mediocrity over vibrant innovation.” They argue that in these two disasters, the government became a “dominant” and “domineering” partner in recovery, which crippled the private sector and provided roadblocks instead of green-lights for economic recovery.
Certainly, we here in Louisiana have lived through the tragedies of a natural disaster. While the federal government promised a speedy recovery, they instead provided ambiguity of purpose and prolonged rebuilding. And now we are faced with another disaster, but this time it is hardly natural. Let’s not be victims again.