December 2008: Is the current crisis proof conservative economics is wrong?
A banking crisis of massive proportions — at last look requiring perhaps a $1.5T bailout — has been the focus of government action for some time now, with the gurus of Wall Street strangely silent, and the perps who engineered the crisis — those big-brained big-time investment house geniuses — sneaking out the back door. The government is buying stakes in banks, and will even be setting up and running investment institutions. The private sector caused it, didn't see it coming, and has no answer for it. Is this proof-positive that conservative economics is a thing of the past?
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Conservative Response
It is unfortunate that people are looking to liberal principles to solve a financial crisis caused by liberal government. We are looking to government to get us out of a government-caused mess.
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Many are calling for more regulation as the savior of the system — and of people's investments. But the system was regulated — highly regulated. Ratios for cash-on-hand to loan amounts were in place. Rules governed the process, and we are not seeing a line of Wall Street suits awaiting prosecution for breaking any of these rules.
IF we had been following conservative principles to begin with, we would have a fast-growing economy, not a floundering one. Sound monetary policy, lower taxes, less debt, a stable dollar, less government spending: were these principles in place, we wouldn't be having this virtual conversation.
Unfortunately, we are heading in the direction of the government not only regulating but owning businesses, like investment houses. That is bad mojo.
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— Editor
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Liberal Response
Liberalism won long ago. When laissez-faire capitalism drove us and the world into the Great Depression, and people did not have a safety net of programs to protect them, they turned to their government to reform the system. Since FDR's New Deal, there have been no more depressions, great or otherwise. There have been dips in the business cycle, but government intervention in prudent amounts has righted the ship. In 1975, monetary policy limited the damage done by the oil shocks. In 1980, the Fed calmed the uncertainty caused by inflation by wringing inflation right out of the economy. A recession ensued, but then followed a long run of steady growth. In this crisis of the moment we aren't near the unemployment numbers of 1982 (6% now versus 9% then). The promise of government money is encouraging the stock market, which should be in rebound by mid-2009. Voters are counting on the new administration to do something to combat high healthcare costs, the solution to which will greatly help the economy and our world competitiveness.
Republicans and Democrats alike are looking for low inflation and low unemployment numbers. They even find agreement in principle on a stimulation plan — the Keynesian idea of government spending to kick-start the economy. Both are also looking for a new paradigm for the operation of investment banks, so that the safety of their investments is clear. And it will be a bi-partisan recommendation that Congress acts on.
— Editor
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Alternative Response
Let's say this up front: in self-sufficient, self-reliant, free America, we should not be in the business of bailing out failures. If they fail, someone comes in and picks up the slack with innovation and hard work. Then, hard-working people will take up the newly-created jobs and the economy will move forward. In the meantime, churches and civic organizations will help people, and they'll do a better job than bureaucracies.
The government should not be our bankers; they should not own businesses [in competition with other businesses], they should not prop up failing businesses, large or small.
Government should enforce clear, minimal laws, protect us, enforce contracts made freely, and nothing more.
— Editor
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Comments |
K. Winter
12/18/08 |
It is interesting, and very sad (bordering illegal) that the big economic companies that caused this meltdown are getting away without punishment. These large companies are coming to the US government begging to be bailed out. This is the same government these companies spent millions lobbying to get less regulation. The even scarier thing than the economy failing because of poor regulation on risky investments is that the government has to bail these companies out, for fear of another great depression. However all of these things do not mean that conservative economics is a thing of the past. For the foreseeable future, yes, conservative economics have failed and the country is looking for liberal agendas to bail it out. Yet the general feeling in business is that it despises regulation, and it is always looking for more independence in times of wealth. The government itself shares some responsibility for this crash yet it was possibly inevitable, just not to this great extent. The government will eventually back out of its investments in the private sector, but it will keep a much closer watch over Wall Street. In the long run conservative economics will again rise and businesses will be prosperous and powerful. Yet hopefully they are able to control themselves and pay a psychic an executive salary, because obviously the boardroom was unable to see into the future.
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S. Rayls
12/9/08 |
America Wake Up
We have just gone through another election and for a second time a President Elect has come forward and asked for help in maintaining a bi-partisan effort with his administration. Not being a Democrat per say, I only wish I had written this at the beginning of President Bush's administration, who also asked for a bi-partisan effort during his inaugural speech, but since that time is lost and gone forever, and with no disrespect meant toward Democrats or the Democratic Party, I fear that the division that exist within our beloved country is so strong that this letter or writing would have fallen on deaf ears at that time. Now with Democrats in charge, the time is hopefully appropriate and the message within this writing will be heard and heeded too. If not, my fear is that our country, America, the land that we all love and live in will self destruct and become so polarized that war will once again break out, not nation against nation, but rather brother against brother.
We live in a wonderful country, so wonderful that it allows us the right to speak our own minds, and that we have done to our own hurt. We bash our political leaders and say things that should never be uttered out loud in front of the vilest person let alone our own children. We accuse, look for dirt, find every fault or dig up anything that may help in an effort to win an election and simultaneously destroy and defame the very characters of both persons running for the office, whether that person is a Democrat or a Republican and then wonder why we don't trust the person taking the office. We forget that there is not one person, whether priest, king, preacher, school teacher or any other person who is and should be held in high esteem, that does not have faults including, fictitiously named, "Little tea toting Aunt May", who has nasty thoughts and fantasies about the mail man.
I, for the most part, am a very strong and active Republican only because I honestly believe that the Republican Party supports and attempts to maintain the values in which I believe and hold to. This much being said, I also believe that after a person is elected to the office of President of the United States of America, that person whether Democrat of Republican, should be held in high esteem and given the support that is due to the office. But what do we do? We immediately look for his faults like sharks on blood and attempt to undermine and continue to destroy his character so that we can try and win the next election. I say this to the shame of both parties and all of the media who publicize the "dirt". The media, being caught up in the shark feeding frenzy, looses' its ability to report the facts and can no longer be trusted as a source for un-biased and informative reporting. And to our elected officials whether Democrat or Republican, every time an accusation is hurled out into public view, you need to understand that this information whether accurate or not is heard and used to your own discredit. But that's OK were Americans, we have the right to say any old thing we choose. Be careful America, the war is only waiting.
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Y. Guzman
12/8/08 |
I want to comment on this view because I don't agree with the Response. If we don't let the government help us then we would never be able to get out of the recession, and if we let the government control it then we would be a communist country. In my opinion I think that it is perfectly fine for the government to intervene with the problems of society especially when the problems are economical. If the government would not try to solve the problems in society then we would not be a mixed economy. However the government can not interfere too much because then it would turn into communism.
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