Munger on the Stimulus Package

An excerpt from this interview with Michael Munger:

Leef: President Obama and his circle of advisers are all well-educated people, yet they support economic policies that seem to be deeply flawed. Would you say that they simply haven’t read the right books and taken the right courses to comprehend what’s going on, or is the problem that politicians sometimes pursue objectives other than long-run prosperity for the general public?

Munger: President Obama is no worse than George Bush, and he actually may be quite a bit better. George Bush is the one who ran the huge deficits, and who allowed enormous discretionary spending increases and increases in domestic regulation.

The problem is this: It’s hard to claim credit for the vitality of the market. Politicians claim credit for DOING things.

Imagine you had a six-year-old daughter, and that she has a high fever. It’s 1820, and we don’t understand germs or fevers very well. You call the doctor, and the doctor comes to the house. “Please, do something. DO SOMETHING, and help my daughter,” you say.

The doctor 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 that people in 1820 knew.

It doesn’t work. Your daughter’s fever is still very high. So, you tell the doctor, “DO SOMETHING! You are the doctor.”

The doctor bleeds her some more. And she dies.

And the next day you blame the doctor for not bleeding her MORE and SOONER. But bleeding was the wrong thing to do.

This stimulus is the wrong thing to do. The fact that the first round didn’t work leads me to think we need to stop! But all the desperate economic parents out there say, DO IT MORE! DO IT LONGER! DO IT FAST!

I don’t blame the President. I blame voters, who have the naïve idea that government is responsible for the economy.

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"I don’t blame the

"I don’t blame the President. I blame voters, who have the naïve idea that government is responsible for the economy."

There is, of course, some truth to this. That said, politicians and the media do everything in their power to perpetuate this myth. Underlying this is the base assumption that there is some mythical group of "right" people who, if elected, would govern "responsibly" and usher in an age of prosperity. This is obviously complete nonsense and even a cursory study of history can dispel the fallacy. The best we can hope for is that a given group politicians makes some marginal improvements and doesn't royally screw everything else up.

Not that Obama needs any encouragement to spend othe people's mo


Munger is being a bit silly in suggesting that Obama, if left on his own, would balance the budget or anything close to it.

Obama has said more than once that "spending is the whole point." In other words, it doesn't really matter what you are spending other people's money on. The whole point is just to spend it.