“The Economist” Lands Out of Bounds

Even the best golfer takes the occasional inexplicably bad swing at a perfectly teed-up ball when his concentration lapses.  Humans being all too fallible, similar lapses mar many other of our ventures, a recent case in point being The Economist‘s enthusiastic citation of the following blog post by Mark Thoma:

We have enough money to pay for military action in Libya, but not for job creation?

Professor Thoma is an accomplished economist, so I presume that he is fully aware of the fact that “we” have plenty of money to “pay for” job creation. Indeed, jobs are created primarily by our general preference for specialization and trade, as exhibited in our activities in what is commonly referred to as the private sector. The notion that the private economy teeters on the abyss of depression if left to its own workings, and therefore requires a free-spending government to prevent us from saving ourselves into penury, left the realm of sophisticated economic thought sometime during the Carter Administration at the latest. (The skeptical and diligent reader needn’t take my word for this. Simply examine the American Economic Association’s list of the 20 best articles ever published in its Review and observe how the Chicago School dominates the field of macroeconomics.)

What the private sector does not do well, as Prof. Thoma surely knows and The Economist most certainly should know, is to finance pure “public goods” such as military operations. Whatever criticisms may be leveled justly at our military operations in Libya, the fact that they are preventing the federal government from “creating jobs” is not among them.

The idea that having the government throw around money it does not have–and has a less than fully realistic prospect of being able to repay–on any sort of boondoggle that catches the fancy of the Vice President, is nothing more than intellectual driftwood left behind by the ebb of the high tide of Keynesianism in the 1960s. But there is much that government can do to impede investment and job creation, from throwing sand in the gears of commerce now to building a tottering tower of debt that raises expectations of vastly higher taxes in the future or the ruin of creditors through accelerating inflation.

The nation’s air strikes against Libya can and should be debated strenuously in terms of their costs and benefits. But the participants in that debate need not concern themselves with foregone job creation.

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