Democratic governments (on the whole) tend to have an unfortunate bias to doing far too much because the uninformed electorate are unwilling to accept the government "doing nothing" and are unwilling to wait for the results of previous governmental action before demanding that "more needs to be done." The irony in this is that quite often the best thing the government can do is nothing, and often problems are made far worse (or morph into different problems) because further actions are taken before people know the results of their initial actions.
Now, the question I have to ask people is whether the end results of the economic stimulus are actually rational worthwhile goals.
Before the economic collapse, large portions of the western world had a negative savings rate and were going into deeper and deeper debt for luxuries that they didn’t need and couldn’t afford. Because of the fear caused by the credit market freezing and the drop in the stock market people have started to actually save money and pay down their debts for the first time in decades. Does it really make sense to try to get people to return to the unhealthy habits of mortgaging their future for junk they don’t need?
Over the long term, house price increases have tracked fairly closely to inflation and the growth in people’s purchasing power. Over the past couple of decades the price of homes decoupled from inflation and grew at a rate far faster than the growth in people’s wages. As a result of this house-price inflation many hard-working families with decent incomes have been locked out of ever buying homes. Does it really make sense to try to stop house prices from falling when so many people are still locked out of buying their own home and living the "American Dream"?
I’m not trying to be a jerk and to claim that other people’s suffering is a great thing, but trying to return to an unhealthy state in the economy simply because it is less frightening than the alternative is a pretty moronic thing to do.
