If you’ve never read Bob Higgs’s brilliant Crisis and Leviathan (Oxford, 1987), you’re missing one of the great social-science books of our time. Higgs demonstrates, in meticulous detail, how the growth of the American state in the twentieth century has followed a regular pattern: a national or international “crisis,” real or imagined, followed by a massive slate of new government programs supposedly designed to alleviate the crisis, programs that are never eliminated or even scaled back after the alleged crisis has abated. The nature of government is to grow, but its growth is normally constrained by public opinion. Government takes advantage of — and sometimes manufactures — “crisis” situations in which those constraints can be lifted. A critical ingredient is fear: state functionaries and their allies in academia and the media work hard to create a climate of panic among the public, a sense that only the state can avert a grave calamity.
I agree with Thom Lambert and Steve Horwitz that Obama’s “stimulus” package is another example of the Higgs effect. Just as the Bush Administration and its house intellectuals seized the opportunity of the 9/11 attacks to stoke public fear of terrorism, all to bully opponents into supporting its “War on Terror,” both the Bush and Obama Administrations have taken advantage of the recession (and the much needed credit-market correction) to stoke public fear of a global economic collapse, all to bully opponents into supporting a major expansion of the state. Just as the USA Patriot Act had little to do with national security, the proposed stimulus package has little to do with economic stimulus. People like Paul Krugman and Brad DeLong have long wished for a massive increase in government spending, the nationalization of credit markets, czars for each major industry, and the like; now they have their justification. Let’s not confuse the issue by pretending that the current debate has much to do with the economy itself.