Robert Shiller's Fatal Prescriptions

Economist Robert Shiller now prescribes a strong dose of medicine — actually poison — for the U.S. economy (see here). Shiller’s diagnosis and doctoring are the same as those of the Bush-Obama-Bernanke regimes. He only wants greater and more persistent doses of the poisons.

Shiller’s policies will crush the realization of the American entrepreneurial spirit, and even that spirit itself, as they crush the economy. They continue on a larger scale the process of destroying the foundations of American greatness that began with the Progressive movement.

Shiller champions government authority over the economy. In this regard, he is at once socialist, fascist, authoritarian, and statist. He speaks against the rising backlash of popular sentiment against swallowing these bitter authoritarian "remedies." He writes to bolster the hand and will of government officials, so that they do not cave in to public pressures.

Shiller wants consistent government and FED pump-priming. He wants it on a "sufficient scale and for sufficient time," which means much more of it for a much longer time. Shiller is a true believer in these measures. He wants far more government spending and far more lending by the FED. He wants them on "a continuing and even larger scale."

He sees no dangers from these spending and lending policies, orchestrated by government. The only danger he sees is in their frustration by an angered public that is rising in protest. These protests, he fears, will cause "damage to our system."

Shiller is a highly useful idiot for Obama and Geithner and Summers and Romer and Bernanke. He cheerleads them. His extreme version of their policies makes them seem reasonable and moderate to the untutored, if that is possible.

Shiller proposes the massive expansion and extension of the State into the American economy "to get us out of the current economic slump, and to restore confidence." This is utter nonsense. The economy would not have tumbled and would long since have been recovering had the government stayed out of it altogether. American confidence is legendary. Americans are ready at any time to take and manage risks. Only concerted government policies can bypass and undermine this American characteristic.

In all of what he proposes, Shiller lacks all good sense and judgment. He lacks all balance. He fails to understand the economy. He fails to understand the public’s outrage. He fails to understand what made America great. He fails to understand that his remedies are poisons to the nation and the economy. Shiller, in other words, is a fool. And he is a dangerous fool, because he has a reputation and obtains a wide hearing. He joins a chorus of fools that includes Obama, Geithner, Summers, Romer, and Bernanke.

The business of America is business. From the outset, this has been true. The American spirit has a very strong entrepreneurial component. This has been true since the first Pilgrims struck out to a new and unknown wilderness, after having indebted themselves to make the voyage. American towns were founded by entrepreneurs. They invested their own funds. They recruited settlers. They risked capital on meetinghouses and trading posts. They negotiated with the native peoples. They traded with them and with foreign peoples. They hired ministers. They governed. They often took on military duties. This is historical fact, as documented by Edwin J. Perkins in his article "The Entrepreneurial Spirit in Colonial America."

The entrepreneurial spirit is widespread among Americans, at all income levels and in all stations of life. The government has been trying to kill that spirit by degrees for a long time. It has partially succeeded. The greatest danger to America is that the government will one day entirely succeed and change the American character altogether by extinguishing its entrepreneurial drive. When Americans rise up against their government’s policies, there are many reasons, oft unspoken, and one of them is the instinct, not yet dead, that these policies are anti-American in a deep way.

Americans want to get ahead. That shows the entrepreneurial spirit. They believe they can get ahead. They abhor waste and inequities, such as are embodied in the lending and spending bailouts of several administrations. They like progress. They have tolerated impositions for far too long because they also value order, and there have not been any clear paths within the system to remedy its defects. Massive impositions rightly catalyze public anger. This is as it should be. Far from being a danger, it reflects a residual degree of entrepreneurial spirit among Americans, severely wounded, but not mortally.

Government lending and spending policies on a massive scale go directly against the enterprises of entrepreneurs. They replace them with rule by bureaucracies. They spell the death of a key pillar of American life. This is what Shiller fails to see and fails to understand. He thinks Americans cannot survive a deep recession. He asserts that their confidence will fail them. All the historical evidence contradicts Shiller, from day one. Americans are a hardy people who are used to surviving hardships. Government has not yet completely wrecked them, although it has made inroads. There is an enormous latent potential there. There is an enormous subterranean reservoir of energy waiting to be tapped. Shiller wants to suppress it for the sake of maintaining his system, which is a corrupt and enervating system.

He belongs to a set of intellectuals whose thinking Americans should have rejected long ago and need to reject now. They have attained power, and they are running America into the ground.

I know of no easy social and political solution to our problems. I know of no magical formula to achieve restoration of values that have been waylaid and tossed aside. But I think that it will be essential for Americans to unloose the dormant and suppressed entrepreneurial spirit and allow it to flourish once again. And to do that, they will have to recognize and reject the forces of suppression represented by the policies of people like Robert Shiller.

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