Greg Mankiw remembers his cautions on the Obama stimulus. No doubt Obama wishes he had paid more attention. Actually, that probably isn’t true. From reading the NYT article it is clear that Obama still thinks everything they did was right. So I hold out no hope for corrections or rollbacks. If Obama could just replace all those pesky American voters with right-thinkers…
People don’t usually spend their money buying things they don’t want or need, so for private transactions, this kind of inefficient spending is not much of a problem. But the same cannot always be said of the government. If the stimulus package takes the form of bridges to nowhere, a result could be economic expansion as measured by standard statistics but little increase in economic well-being.
The way to avoid this problem is a rigorous cost-benefit analysis of each government project. Such analysis is hard to do quickly, however, especially when vast sums are at stake. But if it is not done quickly, the economic downturn may be over before the stimulus arrives.
In the magazine article, Mr. Obama reflects on his presidency, admitting that he let himself look too much like “the same old tax-and-spend Democrat,” realized too late that “there’s no such thing as shovel-ready projects.”
[From The Myth of Shovel Ready]