I love Phil Gramm with one of those platonic, brotherly, nerdly, econo-loves. Phil is a real economist who graduate from a real university, then did real research and taught at a real university.
Then he became a politician. But, as politicians go, he was pretty good.
But I would not be singing Phil's praises if it were not for his remarks in the summer of 2008. I wrote about them here. To that, I can add that we now know that Gramm was absolutely right. The second quarter 2008 numbers showed growth. Here is why I renewed my love for Gramm today.
In class today I taught about the Great Depression and discussed how government turned a medium sized economic problem into a humongous economic problem. Jim Powell's book, FDR's Folly, catalogues the ways in which the Roosevelt Administration declared war on the economy. We could also add the Federal Reserve to the list of miscreants.
I likened politicial behavior during the Great Depression to political behavior today. We have a crisis caused by politicians forcing banks to make bad loans and having huge government-backed enterprises bundle those bad loans into securities. Then, as now, government intervention in the economy caused problems for which politicians now propose that more government intervention is the only solution.
This government insanity is widespread. You can hear it from George W., Nancy Pelosi, Harry Reid, Barack Obama, and John McCain.
One of my students said, "This seems so simple. These people have economists who advise them. Do these economists just not know, or do they not tell their politicians the truth, or do the politicians just not take advice?"
Phil Gramm set me up to knock that one out of the park. Phil, on McCain's staff told the truth! My previous post on Phil revealed that in a heartbeat Obama had dissed Phil and in an hour McCain had disavowed Phil.
Yes, politicians sometimes keep economists around who tell them the truth. But those politicians cannot tell the truth. They want to get elected. They have to pander. They have to gin up contributions. Truth is a liability they cannot afford.
So, yes, there are probably a few politicians that knew that the 2008 stimulus package was an idiotic shell game. (They sent out checks for a few billion, to pump up the economy. Hey, where did they get that money from--from . . . the economy?) But some of those politicians probably voted for the stimulus package because they wanted to appear concerned. Hm, screw things up so I can appear concerned--sounds like a great deal.
Phil Gramm helped me show my students why we have idiotic policies, though there are a few people in the room whom everyone knows are not idiots.