The Hair of the Dog
September 22, 2008
“The private sector got us into this mess. The government has to get us out of it,” said Barney Frank, which illustrates why conservatives often say liberals have a socialist bent.
Free market conservatives understand that many problems have been caused by government’s officious intermeddling in the private sector. The subprime mortgage crisis is no exception.
History has shown that liberal prescriptions don’t work, but when they fail, liberals invariably not only deny responsibility for their do-gooder manipulation but also insist on even more government intrusion. Think of it as “the hair of the dog” remedy on steroids.
For example, many of our health care problems can be traced to increased government control and the reduction of market forces. Yet the liberal solution is full-blown nationalized health care. Never mind that it doesn’t work anywhere in the world and always leads to waiting lines and inferior health care. Never mind that the United States has the best health care in the history of the world, notwithstanding admittedly serious problems.
Another example is Social Security. Instead of creating a trust fund segregated from general revenues, congressional liberals with an insatiable appetite for spending raided Social Security revenues from day one. The system has been one big Ponzi scheme funded by IOUs from one arm of government to another. Bill Clinton and Al Gore had the audacity to propose a “lockbox” to secure Social Security, when their ideological predecessors happily breached their promise for the original lockbox.
But what did liberals do when President Bush proposed that people be allowed to set a portion of their Social Security funds aside in private accounts? They called it a risky scheme to benefit Wall Street. Barack Obama is the latest in a long line of liberal demagogues to make this claim, but his ad on this subject was so distorted as to earn a reprimand from FactCheck.org.
When liberalism causes a problem, by all means, don’t allow the natural equalizer of the free market to cure it. Insist on more government intervention under the theory that the problem is a result of too little government. It’s kind of reminiscent of the Marxist promise of the withering away of the state, is it not? Just give us totalitarian control and we’ll eventually unshackle the proletariat from government bondage. Right. There’s also a bridge to the Kremlin they’d like to sell you.
Which brings us back to the current subprime mortgage crisis. When we strip away all the complexity, we discover that social planning largely led to this debacle. Government politicians and bureaucrats forced lending institutions to make un-creditworthy loans and helped create unnatural demand in the housing market by priming the pump on bad loans. This created an unnatural price bubble in real estate, which was securing these ill-advised loans. When the bubble inevitably burst, the mortgages secured by the artificially inflated real estate plummeted in value, which left us with an epidemic of grossly under-secured loans.
Now the stability of our entire financial system is said to be at risk. It’s so bad that even conservatives are considering supporting an unprecedented plan approaching a trillion dollars to “bail out” the financial industry — not as a sop to Wall Street or corporate fat cats, but to prevent a cascading effect that some financial gurus believe could lead to a depression.
I don’t pretend to have enough information or expertise to know whether the Bush-Paulson bailout proposal, or some iteration of it, is necessary to avert a horrifying financial meltdown, but apparently, many experts, including conservative ones, do.
None of this would be half as troubling to me if I believed both political parties would address it in good faith. While conservatives are highly suspicious and justifiably ambivalent about the magnitude of the proposed governmental solution, I’m confident they’ll approach it with the best interests of the nation in mind.
I wish I had similar confidence in liberal Democrats, who, if past practice is any indication, would rather blame this crisis on Bush and Republicans than help to solve it. Remember Clinton’s infamous government shutdown that he successfully blamed on Newt Gingrich?
But if they do cooperate, it will be at the prohibitive price of even more government intermeddling. They’ve already said they want to subsidize — rather than demand accountability from — homeowners for their irresponsible loans. They want to demonize and scapegoat capitalism and Wall Street, which didn’t cause this crisis, with further regulations.
One major lesson from this the affirmation of the market principle that government does not create prosperity — only temporary bubbles that must go pop.
Wouldn’t it be a refreshing surprise if liberals, who created this monster of a financial mess by their incorrigible commitment to the magic of government, would participate in good faith — instead of partisan exploitation — to find a solution?
Don’t bank the farm on it.