Now, I understand the President says he doesn't wish to supplant the private sector, merely to regulate it in such a manner as to prevent the “reckless speculation and spending beyond our means; on bad credit and inflated home prices and over leveraged banks.” He also said, “Such activity isn’t the creation of lasting wealth. It’s the illusion of prosperity, and it hurts us all in the end.” Which is, of course, why his spending plan calls for the US government to borrow heavily so that the government can spend beyond its means and create the illusion as economic growth.
However, is government action the correct answer to a market crisis (in this case a crisis precipitated by the financial markets)? Is the answer to regulate the market until it, supposedly, cannot fluctuate so drastically? Or is the answer to allow the fluctuation to amputate the non-functioning segments? To allow economic Darwinism (by which I mean profitability, aka, greed) streamline the market until it flows smoothly again seems like a painful alternative to the easy way out of letting the government handle our mistakes.
As a warning against a greater degree of government intervention, I present the findings of the Cato Institute relating to the relationship between financial deregulation and financial crises. According to the study, financial deregulation in itself does not lead to financial instability, as half of the countries in the study that deregulated their financial systems experienced market instability and half did not. The findings point to the size of the country's government as the pivotal factor in whether or not the country will experience a financial crisis: the larger the government, the more likely the market will not self adjust without crisis.
What does all of this mean? It means that continued government interference and "help" is more likely to maintain economic instability rather than promote economic growth. As further evidence of this claim I put forward the theory, increasingly popular as economists study it, that the New Deal prolonged the Great Depression. Also, there is the claim that the government's intervention in the financial market increased the market drop last year. As it is, I wonder how long it will be before the people of this country remember that economic trouble means a shift in the economy as well as economic opportunity to those brave enough to take personal risks. This economy became the world's largest through risk and perseverance rather than cowardice and government control.
"You and I are told we must choose between a left or right, but I suggest there is no such thing as a left or right. There is only an up or down. Up to man's age-old dream -- the maximum of individual freedom consistent with order - or down to the ant heap of totalitarianism. Regardless of their sincerity, their humanitarian motives, those who would sacrifice freedom for security have embarked on this downward path. Plutarch warned, 'The real destroyer of the liberties of the people is he who spreads among them bounties, donations and benefits.' " -- Ronald Reagan, October 27, 1964