There is an old Chinese curse: "May you live in interesting times." It has been an interesting year. The financial crisis of 2008 has inspired enthusiasm for a new paternalistic crusade against the heresies of individual freedom. Interventionist ideas, discredited during the stagflation of the 1970s, are making a comeback both in the ivory towers of academia and in the hallways of the Capitol.
The world has gained a new appreciation for the stabilizing role of government bailouts and bureaucratic restrictions. Economist Paul Krugman has been canonized in Sweden for making straight the way of Barack Obama. Faithful free-lunchers are rallying behind a newly found messiah. Christmas is over and eyes are refocusing from the gift in the manger to the giant bag of goodies entrusted to the new Santa of the Oval Office.
During his weekly preachings from the gospel of Keynes, St. Paul of Princeton reiterates the mantra that public debt is nothing to worry about, as "it's basically money we owe to ourselves." In a 3-D remake of the classic horror fable known as "the paradox of thrift," Krugman portrays consumers and businesses as evil hoarders with a death wish. Thus the fiscal knights in shining armor are called to save the day and prevent "Great Depression 2.0."
We are told that-under the current reduced private spending and investment-an aggressive expansion of the government's role in the economy will create immediate relief. And the best news is yet to come: Our circumstances are so "special" that the short-run pleasure will cause no pain later. Solution "both for today's workers and for their children." Alas, says Bastiat, "Everyone wants to live at the expense of the State. They forget that the State lives at the expense of everyone."
Unfortunately for the fair-minded planners, there is no way for a public program not to divert scarce resources from their productive uses in the private sector. And the bulk of it usually ends up subsidizing tattoo removals for reformed Hell's Angels, diet soda awareness for the morbidly obese, and cherry-flavored condoms for pre-schoolers. This obviously hurts the profits of the entrepreneur-unless he is in the condom business, of course. Tragically, it is much harder to see that the same scheme also forces the wage earner to work more for less-reducing the chances of his children having a more prosperous future.