It Could Have Been Worse.
After taking a few shots from Jack Welch, Joe Stiglitz and Meredith Whitney at a Vanity Fair/Bloomberg panel, Council of Economic Advisers member Austan Goolsbee fired back with a pretty rousing defense of administration policy.
Look, we enter[ed] the government essentially in a hotel that is on fire. We’re throwing people from the windows into the pool to save their lives and this is the evaluation of the Olympic diving committee.[...]
The fact that we are here to bitch about the economy and about this policy and that and the budget forecasts for GDP growth are 1 percent too low, I’m thrilled, I’m overjoyed that we aren’t all out of our jobs and we prevented the Great Depression. That in itself is an overwhelming accomplishment.
Noam Scheiber agrees. "It's remarkable how quickly the people now kvetching about inflation forget that we were on the verge of a massive deflationary spiral a few months ago," he writes.
And I'm with him. There's a tendency in policy arguments to choose your own counterfactual. And fairly frequently, the counterfactual is "a world in which we implemented my preferred policies, and they worked out much as I hoped." Talk to Obama folks, however, and they've got fairly different counterfactuals. A massive deflationary spiral. A total collapse of the financial sector. A second Great Depression. You can say that, in retrospect, those outcomes were not as likely as the experts thought. But at the time, those were the projected cost for failed policies. And so the Obama administration pursued policies that weren't always elegant but were crafted to have as little uncertainty -- and thus as small a chance of catastrophic failure -- as possible.
You don't want to go too far with this line of thinking, of course. Just because an outcome is better than the worst case doesn't mean it was the best case. But even Obama's critics have to admit that on the spectrum of possible outcomes, we've thus far avoided the disastrous scenarios that seemed terrifyingly likely only a few months ago. To say that "it could have been a lot worse" is not faint praise when you're dealing with an unprecedented financial crisis paired with a sharp recession that struck during a presidential transition period. "A lot worse" is, in this case, pretty damn bad.
(Photo credit: Whitehouse.gov)
June 3, 2009; 10:30 AM ET
Categories: Financial Crisis , Solutions
Save & Share: Previous: News Break: How the White House Hopes to Control Health Care Costs
Next: Why Health Reform Is Likely to Have a Public Plan
Posted by: MerrillFrank | June 3, 2009 11:39 AM | Report abuse
Posted by: tomtildrum | June 3, 2009 11:47 AM | Report abuse
Posted by: leoklein | June 3, 2009 11:48 AM | Report abuse
Posted by: fallsmeadjc | June 3, 2009 4:28 PM | Report abuse
Posted by: earther | June 3, 2009 8:37 PM | Report abuse
Posted by: topos | June 3, 2009 9:04 PM | Report abuse
The comments to this entry are closed.