05 October 2009

This chart deserves re-posting

From Instapundit, via TJICistan:


A lot of the stimulus skeptics and those who are concerned with the largely ex post nature of macro econ were wondering at this time last year how you would be able to tell if the stimulus had worked. I look at the chart above and conclude the ARRA was a dismal failure; stimulus supporters probably would conclude that we need to (or needed to) double down and throw even more money at the problem.

Now that we're committed to spending a trillion plus dollars, is there any course of events which could possibly cause stimulus supporters to conclude they made a mistake? Is there any possible evidence which would falsify the pro-stimulus hypothesis we acted on?

This is part of why I have such disdain for public policy. The entire apparatus operates like this: "In hopes of accomplishing X, we are going to do Y." But no one ever looks back to see if there was the predicted effect on X. We just keep chugging along doing Y, possible forever. And more often than not Y necessitates Z and Z leads to Z' and then Z'', and everyone just forgets about X and Y and the entire line of reasoning that brought us to Z''. The scientist in me does not see how you can survive in the world without testing your hypotheses.

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