By Richard Vedder
The media have proclaimed we are having a coronation, not an inauguration. The nation is in love with Barack Obama. This is truly, Obama's Nation.
But is it? Or are we entering, pardon the pun, an "Obamination?" Are we about ready to unleash public policies that will damage America for many years to come? It is interesting that the inauguration was accompanied by about a $400 billion decline in the national wealth, as measured by stock indices. Obama plans on using the excuse of a "crisis" to dramatically expand the size of government, enact huge increases in welfare spending, and reward friends on a massive scale --all in the name of stimulus, using money borrowed from God knows where--I fear it may be the Federal Reserve )which would have the effect of dramatically increasing an already bloated supply of money).
Robert Higgs in Crisis and Leviathan outlined how the massive expansions of government proceeded from alleged crises --World War I, the Great Depression, World War II. And when there is not really a new national crisis --invent one, as LBJ did with his War on Poverty in the mid-1960s.
Part of all of this dropping of money out of airplanes on public institutions is directed to education. A lot will go, if Obama gets his way, to K-12 education, which is arguably even more inefficient and deficient than higher education, since much of it is a government monopoly largely controlled by giant teacher unions. So in the name of stimulus, Obama will pay off the NEA, AFT and other groups that cynically use children to redistribute income for themselves.
But, as previously indicated, higher education is designed to share in the largess. Billions for school buildings --when most existing structures are inefficiently used, often empty months of the year. Billions for student financial aid when the evidence is that the explosion of such aid has been accompanied by an INCREASE in the burden of higher education on students.
This is on top of the fact that stimulus programs do not work. They did not in the 1930s --the WPA once employed 3.3 million workers (nearly 10 million today) -- but unemployment rates were still over 17 percent. They did not in Japan during the 1990s, where economic stimulus was associated with an abrupt drop in the growth rate in the Japanese economy. All of this is wrong, will be costly, etc.
Sorry, I am not in a festive mood, thinking, like Wall Street, that this populist mania in Obama's Nation will lead to obaminally poor economic conditions in the years ahead --and colleges, like others, will lose. After all, if stagflation returns, a distinct possibility, colleges and universities will be big losers, if the experience of the 1970s is any guide.