Look, I'm as liberal as the next guy, on this blog at least, but today's Paul Krugman column reminded me of the follies in relying on government activism to bail us out of every downturn. Krugman runs through a greatest-hits list of past economic calamities, noting that in most cases, recoveries occured despite government action, not because of it (the early '80s being an exception). Government, as Krugman implies, can do a lot of good, but the silver lining he sees for the current crisis--pent-up demand for housing, cars, and durable goods--is wholly a function of the market, one government can encourage but not replace.
All this is well and good and probably obvious. And yet Krugman, in good liberal fashion, ends his piece with a plea. "Let's be clear," he writes. "The Obama administration's policy initiatives will help in this difficult period--especially if the administration bites the bullet and takes over weak banks. But still I wonder: Who'll stop the pain?" Well, according to all the reasoning in his column, no one, because no one can. And yet he--and I, and other liberals--want to believe there is a positive, reasoned action that we as a country can take to make things right again. For many liberals who hoped that the Obama era would bring a golden era of government-led progress, I fear the next few years will be chastening indeed. We will see progress, yes, but also constant reminders of government's limits. Given the tone of his column, I wonder if Krugman isn't coming to the same conclusion.