Amity Shlaes, distinguished authorette of the definitive history of Teh Great Depression, The Forgotten Man, agrees with me that Obama’s recovery plan is identical to the plan that mired the Japanese in recession throughout the 1990’s and impedes Japan’s growth to this date.
President-elect Barack Obama put forward a plan this week for the largest government infrastructure project in a half-century. The idea is to revive the economy and create jobs for America’s unemployed. But huge public works projects often fail to revive national economies. Consider the example of Japan in the 1990s.
The projects were similar to some infrastructure plans under discussion here today. Bridges? Japan put up the longest suspension bridge in the world. Airports? Kansai International, yes, on an artificial island, but also local fields such as Ibaraki Airport near Mito. Roads? Japan built new streets and highways, including the famous New Tomei Expressway. For biotech and telecommunications, Japan poured out the subsidies.
When one plan proved insufficient, another was begun. In 1999, Japan announced a scheme to create 700,000 jobs, much as Obama recently announced a plan to create or save 2.5 million jobs. As with the U.S. example, politicians were precise about the number of new jobs . . . and less precise about their cost. Between 1992 and 2000, the Japanese launched 10 stimulus packages that included public works.
The spending yielded painfully little for the rest of the economy. The Nikkei stayed down. The country’s standard of living failed to keep pace with the rest of the world’s.
But, what the trillions in new spending will do is provide unprecedented opportunities for graft and corruption. A thousand Big Digs will draw a thousand Tony Rezkos. Obama does not know the first thing about running a business, but he knows how to hand out other people’s money; be it $100 million from the Annenberg foundation, or the campaign in which he outspent his opponent by a quarter billion. And the Democrats in Congress are idiots who now have unchecked power. If Nancy Pelosi and Harry Reid saw a fire break out in the Congress, their instinct would be to try and smother under piles of freshly printed money.
They imagine that they can buy their way out of a recession. They will FAIL!