Another aspect of journalists’ remarkably credulous and fatuous attitude towards policymakers is their view that rhetoric, not substance, is what matters. Hence the constant references to the Bush Administration’s “dedication to free-market principles,” its “aversion to regulation,” its “belief in letting markets work by themselves.” This is of course sheer balderdash and piffle, virtually the reverse of the truth. Bush and Paulson and Greenspan and their clique are “free marketeers” in the same way (to borrow from A. J. Jacobs) that Olive Garden is an Italian restaurant. They adopt the language, and some of the form, of market advocacy without any of the content. The Bush Administration was already, before the “financial crisis,” the most economically interventionist since LBJ; it now ranks with Hoover and FDR as the most aggressively anti-market in US history. Greenspan and Bernanke expanded the money supply like none before; Bush and Cheney borrowed and spent trillions to finance overseas adventures; the Federal Register added pages at a record-setting pace; now the banking and automobile industries have become GSEs. Lassiez-faire, indeed! (BTW can anyone name a specific act of “deregulation” that contributed to the financial crisis? Gramm-Leach-Bliley? No way. And GLB was under Clinton, as was the infamous WGFM. What specific regulations, e.g. on hedge funds or mortgage-backed securities or executive compensation, did the Bush Administration oppose?)
And yet, there was Juan Williams on yesterday’s Diane Rehm show explaining, matter-of-factly, how Bush and Paulson had allowed their “free-market ideology” and “resistance to regulation” to “commitment to the idea that the market works itself” to lead the nation into ruin. Williams may be a good news reporter, but he has the political-economy understanding of a fifth-grader. Does it ever occur to these “watchdogs” to investigate what government officials actually do, rather than simply repeat what they say?
Steve Hanke, professor of applied economics at Johns Hopkins University, talks with Bloomberg’s Tom Keene about “panic mode.” Get ready for the “jump.”
“The power to determine the quantity of money… is too important, too pervasive, to be exercised by a few people, however public-spirited, if there is any feasible alternative. There is no need for such arbitrary power… Any system which gives so much power and so much discretion to a few men, [so] that mistakes - excusable or not - can have such far reaching effects, is a bad system. It is a bad system to believers in freedom just because it gives a few men such power without any effective check by the body politic - this is the key political argument against an independent central bank.”
Watch Volume 3 of Milton Friedman’s 1980 PBS series Free to Choose “Anatomy of a Crisis.” Also watch parts 1 and 2. (Note: the Chicago and Austrian schools do not agree on the cause of the Great Depression.)
I’ve been amazed at the sheer numbers of otherwise sensible people who seem to be under the impression that paper credit—not savings and capital—is the key to capitalist success. It’s as if the core message of the Austrians has not stuck at all, and many capitalists themselves have bought into the line of the Keynesians and others who believe that productivity itself will dry up in absence of low-price lending for all. If banks “hoard” their resources, we will all be back to the stone age, or so they claim.
There are times to defend credit, as when government is trying to crack down on payday lending or trying to regulate credit instrument exchanges in the securities industry, and times to put matters in perspective and point out that credit must be built on a foundation of deferred consumption and savings.
BIDEN: Wall Street run wild… make sure that CEOs don’t benefit from this… Deregulation… that’s why we got into so much trouble… We don’t call that redistribution. We call that fairness…, I agree with the governor. She imposed a windfall profits tax up there in Alaska. That’s what Barack Obama and I want to do… The wealthy have done very well. Corporate America has been rewarded. It’s time we change it.
PALIN: Darn right it was the predator lenders…There was deception there, and there was greed and there is corruption on Wall Street … pushing for even harder and tougher regulations. Look at the tobacco industry. Look at campaign finance reform.… And those huge tax breaks aren’t coming to the big multinational corporations anymore …I had to take on those oil companies and tell them, “No,” … the greed there that has been kind of instrumental … put government back on the side of the American people, stop the greed and corruption on Wall Street… made aware now to Americans about the corruption and the greed on Wall Street …
The error? A lack of understanding of the role of the entrepreneur and the capitalist in wealth creation. The middle class and the workforce are crucial elements of a health economy, but so are the risk-takers, the investors, the capitalists, in other words, the current favorite villains of our presidential and vice-presidential candidates: Wall Street and Big Oil. Without “windfall” profits, innovation, progress and wealth creation are severely hampered. Funny how no one seems concerned over “windfall” losses.
The omission? While everyone is busy blaming the greed of Wall Street, little is being said about the role of government policies in creating the current economic down-turn. The wisest statement of the debate may have been Biden’s when he said, “If you don’t understand what the cause is, it’s virtually impossible to come up with a solution.”
![“Business and Credit” via Mises.org:
I’ve been amazed at the sheer numbers of otherwise sensible people who seem to be under the impression that paper credit—not savings and capital—is the key to capitalist success. It’s as if the core message of the Austrians has not stuck at all, and many capitalists themselves have bought into the line of the Keynesians and others who believe that productivity itself will dry up in absence of low-price lending for all. If banks “hoard” their resources, we will all be back to the stone age, or so they claim.
There are times to defend credit, as when government is trying to crack down on payday lending or trying to regulate credit instrument exchanges in the securities industry, and times to put matters in perspective and point out that credit must be built on a foundation of deferred consumption and savings.
[photo source]](http://30.media.tumblr.com/Anhohk1saeomgecwniqDM3hho1_400.jpg)
![Welcome to the party:
VP debate quotes and commentary courtesy of Wealth Is Not The Problem:
BIDEN: Wall Street run wild… make sure that CEOs don’t benefit from this… Deregulation… that’s why we got into so much trouble… We don’t call that redistribution. We call that fairness…, I agree with the governor. She imposed a windfall profits tax up there in Alaska. That’s what Barack Obama and I want to do… The wealthy have done very well. Corporate America has been rewarded. It’s time we change it.
PALIN: Darn right it was the predator lenders…There was deception there, and there was greed and there is corruption on Wall Street … pushing for even harder and tougher regulations. Look at the tobacco industry. Look at campaign finance reform.… And those huge tax breaks aren’t coming to the big multinational corporations anymore …I had to take on those oil companies and tell them, “No,” … the greed there that has been kind of instrumental … put government back on the side of the American people, stop the greed and corruption on Wall Street… made aware now to Americans about the corruption and the greed on Wall Street …
The error? A lack of understanding of the role of the entrepreneur and the capitalist in wealth creation. The middle class and the workforce are crucial elements of a health economy, but so are the risk-takers, the investors, the capitalists, in other words, the current favorite villains of our presidential and vice-presidential candidates: Wall Street and Big Oil. Without “windfall” profits, innovation, progress and wealth creation are severely hampered. Funny how no one seems concerned over “windfall” losses.The omission? While everyone is busy blaming the greed of Wall Street, little is being said about the role of government policies in creating the current economic down-turn. The wisest statement of the debate may have been Biden’s when he said, “If you don’t understand what the cause is, it’s virtually impossible to come up with a solution.”
Look sad and say “D’oh.”
[photo source]](http://29.media.tumblr.com/Anhohk1saeo1xnatuAz85dbjo1_400.jpg)
