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U.S. Economy Is Up in the Air With George Clooney

Author: Amity Shlaes, Former Hayek Senior Fellow for Political Economy
January 12, 2010
Bloomberg

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Airport security lines trigger the same mental process in most Americans. Irritation is the first stage. You arrive at the front of the line hostile to the whole enterprise -- the conveyer belt, the company that manufactured the recalcitrant zipper on your bag, the not-especially-polite airport workers.

This month, after the Christmas Day bomb attempt over Detroit, you feel resignation: "I can put up with this as long as the Transportation Security Administration prevents another bomber." Next, as you pull off your shoes and look up into the faces of the security guards, you find an important bit of consolation for the delay: "At least somebody got a job out of this." After you've cleared security, comes this final thought: "But it isn't a very good job, is it?"

The entire experience recedes during the rush to the gate. Still, like the suitcase at the other end, the security line experience is worth unpacking. That's because it recalls what's wrong with our economy in general this winter.

In airports, talk runs to upgrades. The unsaid part of the security line is that it is a downgrade in the quality of our day. Every one of us budgets time. Airport security steals at least half an hour. That means we have lost minutes where we could have been doing something at the office or at home.

Sure, we may be stroking the iPhone right up to the moment we have to fit the driver's license back into the wallet. Still, we know that, often as not, we are just consoling ourselves again, this time by pretending to work rather than actually doing something.

Government Intrusions

The major new government programs of 2008, 2009 and now 2010 are like those security lines -- irritating intrusions. The new health-care legislation, for example, seeks to do something impossible: limit federal outlays even as it sustains service.

That kind of impossible promise tends to result in shortages -- waits of airport-size duration. What the legislation promises to do is make a hospital more like a bad airport. The Senate's proposed surtax on insurers who offer high-end plans is the equivalent of shutting down the Admiral Lounge.

Then we come to the second stage, the consolation of job creation. Given the rockiness of the job market, it is somehow comforting to see those airport security workers in their uniforms. At least they're taken care of; that's the typical analysis of the responsible person. Since so many of them are from minority groups or immigrants, we're glad to see them establishing themselves in the U.S. Somehow that makes the waste less bad.

Getting Things Done

Most of us react similarly at the news of federal stimulus projects. At least something is being done when Alachua County, Florida, which has a poverty rate of 23 percent, gets $105 million in recovery money. The $3 million that went to the Texas Department of Protective and Regulatory Services for foster care on April 1, 2009, was likewise reasonable. Who can turn down kids? Then there are the billions that were poured into banks. Perhaps that was necessary. In the too-big-to-fail doctrine, banks are like air-traffic controllers.

What about that final stage, the skeptical look back? At the airport, one thing that bugs us is the arbitrariness of it all. Who, in August 2001, would have thought that slippers, Crocs and any other kind of shoe that is easy to take off would benefit from a geopolitical event? Similarly, few could have predicted that products we love -- cigarette lighters, pocket knives, large tubes of toothpaste -- would be damaged by an economically unrelated phenomenon, the aggression of al-Qaeda.

Not Optimal

Big new government programs, whether the coming health-care law or stimulus plans, also create untold number of business winners and losers. The winners include green consultants who charge companies for retrofitting their building so they might win the favor of a moody Environmental Protection Agency. Losers include those companies whose business plans for a city street were knocked out when the state or federal government decided to use stimulus cash to build its own project.

In other words, whether it is TSA jobs or stimulus outlay, what the government does may not be bad. But it is rarely optimal. Neither a TSA worker nor a stimulus worker is as likely as a private-sector entrepreneur to come up with and implement an idea yielding big productivity gains. That is why our growth these cold months feels unsolid: between the security work and the stimulus work, we are generating junk gross domestic product, and promising to generate more.

What could make more of our growth more genuine? Recognizing that defense outlays should be made for defense alone, and not for the economy's sake. What the economy needs is less airport, and less stimulus. Citizens tend to know that the airportization of America can't bode well, just as the new George Clooney film in its own way suggests. The country won't really be able to get off the ground as long as it is still up in the air.

This article appears in full on CFR.org by permission of its original publisher. It was originally available here.

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