COLOMBO -- A gathering of South Korea's leading policymakers and economists have agreed that Seoul should apply fiscal-stimulus measures through the first half of 2004. It is a great tragedy that this conclusion reflects the best judgments of mainstream economic orthodoxy, because the simple fact is, they are wrong.
Despite years of evidence that tinkering with the economy leads to failure or disaster, the temptation to play an activist hand in markets continues unabated. It is unsurprising that politicians select policies that yield short-term benefits. By the time the real costs come back to haunt the economy, the role of those policies will either be forgotten or not well understood. Economists that support such nonsense should be as much ashamed as they are discredited by their association with policies that bring initial gains but impose large future costs.
One universal observation relating to government expenditures is that what goes up almost never comes down. This is because recipients of newly minted largess become a vocal interest group that lobbies for the continuation and expansion of the goodies they receive.