Throughout human history societies have been informed and instructed by the superstitions of their age. For thousands of years we believed a single person—a king, a pharaoh, a high priest— should have life and death power over us. Any other social structure was unthinkable. We believed the gods that brought drought could be appeased only by animal and, sometimes, human sacrifice.
Today these superstitions seem ridiculous. How could thinking people ever have believed such preposterous notions?
But here we are. August 2011. And the zeitgeist has given birth to a new superstition. One that will bewilder future generations as much as the belief in the absolute power of pharaohs or drought reflecting the anger of the gods does ours.
What is this new superstition? The belief that we can grow the economy by shrinking it.
The idea defies common sense. And yet in just two short years it has become the fundamental guiding principle of public policy.
The story begins with the financial and economic collapse of 2008. Housing starts ground to a halt. By early 2009 unemployment was in the process of doubling. The economy was all but dead in the water.
With private investment having all but dried up, the government stepped in. The three year stimulus bill, passed in early 2009 was too modest, a result of President Obama’s mistaken belief that if he asked for less and made tax credits to business almost as large as the direct job creation component Republicans would be supportive. More >>>
Location: Cayman Islands
