Depressing as it is, politics usually trumps economics. There’s nothing new in that, but free-market advocates ought to learn some lessons and adjust their strategy accordingly.
The politicians who run the government—and think they run the country—are afraid to appear as though they are doing nothing. We saw this when the recession hit. They were particularly worried about seeming to put party above the public good.
As the Wall Street Journal put it back then
The speed with which Washington hashed out the [stimulus] plan was driven mostly by the drumbeat of bad economic news. Behind the scenes, it was greased by other powerful motivations. Congressional Democrats needed to demonstrate they were capable of results after a year of gridlock. Republican lawmakers, up for re-election, wanted to show sensitivity to voters’ economic woes. And the White House didn’t want ‘recession’ added to its legacy.
Political interest was universally aligned against good economic sense. The politicians could get away with this because most of the public is economically illiterate. The “seen” overshadows the “unseen.” Such is how we get economic policy. It’s happening now.
F.A. Hayek never spoke more wisely than when he wrote, in “The Intellectuals and Socialism”:
What we lack is a liberal Utopia, a programme which seems neither a mere defense of things as they are nor a diluted kind of socialism, but a truly liberal radicalism which does not spare the susceptibilities of the mighty (including the trade unions), which is not too severely practical and which does not confine itself to what appears today as politically possible. . . . Those who have concerned themselves exclusively with what seemed practicable in the existing state of opinion have constantly found that even this has rapidly become politically impossible as the result of changes in a public opinion which they have done nothing to guide. Unless we can make the philosophic foundations of a free society once more a living intellectual issue, and its implementation a task which challenges the ingenuity and imagination of our liveliest minds, the prospects of freedom are indeed dark. But if we can regain that belief in power of ideas which was the mark of liberalism at its best, the battle is not lost. [Emphasis added.]
Hayek wrote that over 60 years ago. We haven’t progressed as much as we like to think.