You’ve probably never heard of Lincoln Beachey.
An aviation pioneer, Beachey flew at the beginning of the 20th century. During one of his first air exhibitions, Beachey did something totally terrifying when his plane stalled. The opposite of what anyone had ever done before, he counterintuitively turned his plane into the spin and pointed its nose downwards. Reversing a deadly nosedive, he landed safely.
Hearing about Lincoln Beachey on a Radio Lab podcast, I thought of February 2009. With the economy nosediving, the President proposed and the Congress approved a massive injection of stimulus money. A seemingly logical maneuver, it appears not to have had the impact that many of us expected.
Are we responding like Lincoln Beachey’s predecessors who turned away from the spin and pointed their noses upward? Or does the intuitive response work and we just need more?
The Economic Lesson
One group of economists describes the American Jobs Act as the additional stimulus we need. Seeing the money directed toward job creation, infrastructure projects and payroll tax cuts, a second group of economists says it is a repeat of the failed 2009 stimulus program.
As with Lincoln Beachey, we seem to have a group that believes the logical sounding Keynesian approach will work and a second group saying, if we look more closely and think like Friedrich Hayek, we would see it is profoundly flawed. You might enjoy looking at the Keynes/Hayek rap debates here.
An Economic Question: Is your bias toward more or less government economic intervention. Explain.