Obamanomics: “the same failed ideas”
Barack Obama tells us to embrace his “stimulus package” and other planned interventions in the economy–because “We can’t posture and bicker and resort to the same failed ideas that got us into this mess in the first place.”
True. Here are four top failed ideas that we should not resort to.
- The idea that government should take our money and spend it as it sees fit, in order to “stimulate” us to be productive participants in the economy.
- The idea that free-market outcomes must be countered with “public-spirited,” taxpayer-backed programs–such as Fannie Mae, Freddie Mac, the Federal Housing Administration, and the rest of the “affordable housing” racket.
- The idea that financial institutions are “too big to fail”–which, by virtually eliminating the possibility of failure, encourages institutions to take on much higher levels of risk than they would in a free market.
- The idea that saving is unnecessary, and that consumption, not production, is the key to economic growth–an idea that, whether quickly or slowly, whether on a desert island or a 300 million-person economy, leads to poverty.
Unfortunately, all four of these ideas are sacred tenets of the “stimulus plan” and the other interventions being entertained by the Obama administration. And they have been part of the countless “emergency” measures that have been implemented since the onset of the crisis. As I wrote back in September 2008:
Over the last year, the central planners at the Fed and the Treasury have claimed that they will stop the credit crisis with some new dictatorial intervention–first with Bear Stearns, then with Fannie and Freddie, then with AIG. Now they offer us yet another magic bullet: a $700 billion check from taxpayers to Hank Paulson–who will bail out as many financial institutions as he sees fit.
This socialistic power grab, just like the last half dozen, is being sold as a necessary, one-time “emergency” measure. But these measures are simply greater and greater doses of the poison that got us where we are in the first place: government manipulation of the housing and financial markets.
The government is following the same ideas, the problems are getting worse, and the solution, I believe, is still the same: “disentangle and remove the government from the financial and housing markets. This means, for starters, getting rid of the Fed’s power to manipulate interest rates, letting housing prices fall to market levels, dismantling Fannie and Freddie, and ending bailout promises.” Or, to put it more simply, capitalism, genuine capitalism, is the only successful idea that can get us out of this mess.