Sometimes a picture really does tell a thousand words. Here’s a chart, based on data from the Philadelphia Fed, showing actual economic results compared to the predictions of professional economists. As you can see, my profession does a wretched job. Comparisons based on predictions from the IMF, OECD, CBO, and OMB doubtlessly would generate equally embarrassing results. This does not mean economists are idiots (insert obvious joke here), but it is an additional reason why Keynesianism is misguided. If economists are unable to predict what’s going to happen with the economy in the near future, why should we expect anything positive when politicians tinker with short-run economic performance? That’s especially the case when they pass so-called stimulus legislation that increases the burden of government spending.
Archive for January 10th, 2010
The Washington Times has an article exposing how a law firm is simultaneously doing legal work on a program for the government while also lobbying for more handouts from that program. Here’s an excerpt from the expose:
One of the law firms hired to provide legal work for the Treasury Department on a multibillion-dollar federal loan program also lobbied Congress for a private client pushing to expand the same government initiative, records show. The Treasury Department retained Sonnenschein, Nath & Rosenthal LLP more than a year ago to provide legal advice on the Federal Reserve’s Term Asset-Backed Securities Loan Facility (TALF), a program aimed at boosting lending to small businesses and consumers. While advising the government on TALF last year, the law firm also lobbied Congress for the Recreational Vehicle Industry Association (RVIA), an industry group seeking to expand TALF to include recreational vehicle loans. …Treasury said its officials did not know about the firm’s lobbying work. “Sonnenschein did not notify Treasury about its work on behalf of the RVIA,” spokesman Andrew Williams said when first contacted last year about the arrangement. In addition, Mr. Williams said, Treasury officials met with the firm “to discuss the issue and our expectations regarding notification of actual or potential conflicts of interest.” …According to a federal contracting database, the government has awarded more than $3 million to the firm in connection with its legal work on both TALF and auto-loan programs.
The broader lesson from this article is that big government creates big opportunities for corruption. This video explains why Washington is a rat’s nest of special interest deal making.