Seeing President Bush the other day acknowledge we are in economic turmoil, but that we shouldn’t worry because the government’s here to help, and that they’re dilligently working on it, is a bad sign. It looks like this morning will see another great and terrible solution.
Market problems (a direct consequence of various government economic interventions) are bad enough. But getting the government even more involved is even worse. Bad problems become worse. A moderate recovery time becomes a slow recovery time. Or a problem gets pushed to the backburner, for someone else to worry about (like the national debt, say).
American hubris is near an all-time high: after all the government-induced market turmoil over the decades since serious government intervention started (like the Federal Reserve or the New Deal, for instance) we still think we can control market forces and subdue economic crises by getting together, having a meeting, making a policy, printing some money, and giving some speeches. The Soviets tried this approach for decades and it was quite disastrous. Socialism (admittedly closer to our current situation than Soviet Communism) has crippled Europe’s economic health. Central economic planning is really what’s going on, and it is disturbing for me to see both parties sickeningly and quickly cooperate to “fix” a problem by making it worse.
The biggest problem is that the arrogant, high-and-mighty Washington elitists have made no concerted effort to understand the problem. They assume their charts and graphs and equations (or their subjective, highly biased interpretation of them) are correct, with no attempt to truly investigate not only the fundamentals of their economic models, but also the effect of prior government economic interventions. The assumption is made that they understand the problem and know how to fix it, when in reality, neither is the case.
Some of the biggest government economic interventions led up to (i.e. the Federal Reserve) and prolonged significantly (i.e. the New Deal, Hoover Dam, etc.) what we call The Great Depression. Another set of grandiose economic interventions (i.e. LBJ’s war on poverty) led up to the stagflation problems in the 1970s: prices go up (inflation) but economic growth is stagnant. Stagflation conditions certainly are plausible over the next few years.
The worst consequence of this biggest problem is that individual liberty has shrunk. We move closer to a totalitarian state, where the government takes nearly everything from us (like the opportunity to sell stocks, or an increasing set of long-term financial obligations, or our money via inflation) to care of everything for us (listen to Nancy Pelosi, for instance, talk of government “insulating Main St.” from the effects of this economic crisis).
I do not believe that many in Washington are complicit in the disaster: most are economically ignorant, unaware of the ineptitude of and destruction associated with government economic intervention. But this is no excuse. It is our responsibility to be educated, to be aware, and to understand the principles (i.e. freedom, individual responsibility, private property rights, etc.) that America was founded on, and that we have largely ignored in the last hundred years or so in favor of a new set of values that hold economic intervention in the highest esteem.