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Economic illiteracy in Congress is simply frightening

Listen to Speaker Nancy Pelosi describe how sending out unemployment checks is the fastest way to create jobs, better than just about anything else. Let me hasten to add that there are plenty of Republicans that would flunk a test covering basic economic knowledge, but here we have one of the most powerful people in the world revealing an astonishing lack of economic knowledge and common sense. It is truly frightening and very disheartening.

In the decades that I have spent studying the interaction of public policy and economics in dozens of countries around the world, I have discovered time and again that most of the great economic tragedies can be traced back directly to misguided policies and an utter lack of understanding on the part of politicians of how businesses and economies actually work. The amount of pain, suffering, and economic losses incurred by hundreds of millions, if not billions of people around the world, due solely to the policy prescriptions of ignorant and arrogant politicians, is almost incalculable. And of course the depression of the 1930s is just one example, as related so well by Amity Shlaes in "The Forgotten Man." "FDR's Folly," by Jim Powell, is also excellent.

There are two solutions to this problem: only put people in power who really know how economies work (or who have advisors who do), or severely limit the ability of politicians to meddle with the economy. As a practical matter, the latter seems like the best choice. Or, as Rick Santelli put it the other day, "Just stop spending! Stop the spending!"

Speaker Pelosi: as noted in my previous post, the federal government has been sending out unemployment checks to almost 10 million people for the past year—an unprecedented number of checks—yet the unemployment rate has been stuck at a very high 10%. May I suggest that you have no idea what you are talking about?

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