Right now, the economic landscape looks like that movie of the swaying Tacoma Narrows Bridge you might have seen in a high school science class. It started swinging in small ways and then the oscillations built on one another until the whole thing was freakishly alive and the pavement looked like liquid.<\/p>\n
A few years ago, the global economic culture began swaying. The government enabled people to buy homes they couldn\u2019t afford. The Fed provided easy money. The Chinese sloshed in oceans of capital. The giddy upward sway produced a crushing ride down.<\/p>\n
These oscillations are the real moral hazard. Individual responsibility doesn\u2019t mean much in an economy like this one. We all know people who have been laid off through no fault of their own. The responsible have been punished along with the profligate.<\/p>\n
It makes sense for the government to intervene to try to reduce the oscillation. It makes sense for government to try to restore some communal order. And the sad reality is that in these circumstances government has to spend money on precisely those sectors that have been swinging most wildly \u201d\u201d housing, finance, etc. It has to help stabilize people who have been idiots.<\/p>\n