Wednesday, November 26, 2008

Giving Uncle Sam a partial break

In early 2006, I wrote an essay for Identity Theory called “Big Government and the Big Easy”.

The essay was an attempt to defend public service and to highlight its many accomplishments. It was also an attempt to rehabilitate the idea of spirited, competent public sector participation in a well-balanced society. Here’s an excerpt:

“Produce a private sector resume that boasts the equivalent of The Marshall Plan, The Manhattan Project, The Interstate Highway System and the Apollo Program, and this peon to public sector accomplishment will be abandoned forthwith. Think of that apocryphal moment in American achievement when a bunch of government bureaucrats navigated a near-inoperable Apollo 13 safely back to Earth. It's hard to recall a private sector accomplishment that rivals this moment of quintessential American genius. Stock options can only gnash their teeth enviously. Some pages from history demolish the best right-wing polemics.”

Now comes Jim Bianco of Bianco Research who has adjusted Uncle Sam’s more signature accomplishments for inflation. As it turn out (and thanks to Barry Ritholz’s blog for assembling this information), the cost to date of the current Credit Crisis bail-out, $4.6 trillion, now exceeds all of government's 'wasteful forays' combined. Ah yes, the power of unfettered markets indeed:

• Marshall Plan: Cost: $12.7 billion, Inflation Adjusted Cost: $115.3 billion
• Louisiana Purchase: Cost: $15 million, Inflation Adjusted Cost: $217 billion
• Race to the Moon: Cost: $36.4 billion, Inflation Adjusted Cost: $237 billion
• S&L Crisis: Cost: $153 billion, Inflation Adjusted Cost: $256 billion
• Korean War: Cost: $54 billion, Inflation Adjusted Cost: $454 billion
• The New Deal: Cost: $32 billion (Est), Inflation Adjusted Cost: $500 billion (Est)
• Invasion of Iraq: Cost: $551b, Inflation Adjusted Cost: $597 billion
• Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion
• NASA: Cost: $416.7 billion, Inflation Adjusted Cost: $851.2 billion TOTAL: $3.92 trillion

I am far from a gloating neo-Marxist. But folks, can we re-introduce some balance into the debate? An unregulated financial economy has led us to the brink. Moreover Uncle Sam’s track record is surprisingly impressive. What private sector can stand a comparison against Uncle's resume? GM? GE? Lehman Brothers? Citicorp?

Alas the private sector bumblers are too epic and too numerous to count. So is government the solution? Certainly not exclusively. Does it play a crucial role in the larger context of a functioning society? Absolutely.

When are free market apologists going to learn how to walk and chew gum at the same time?

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