This is the perfect time for someone with a voice to try to push an agenda. Barack Obama is looking to beat John McCain by playing prevent defense in this final drive to election day. He won’t do press conferences and avoids pretty much all questions altogether. McCain is only able to preach to his choir, probably gaining very little momentum. But journalists are sitting here with a full blown financial crisis and an increasingly large divide in the American population over capitalism vs. socialism.
This is just what Dr. Charles Wheelan did with his voice on yahoo’s finance page. He makes the claim that we “free-market ideologues” have lost the battle. The free market, he claims, is obviously fully responsible for the current financial situation and proves how wrong we were. This is a great position for him to be in, seeing as everyone knows that we are a capitalist country and it must be capitalism to blame. Well, I for one am very happy Dr. Wheelan has given us an opportunity to prove that you can be a total dullard and still have “Ph.D.” after your name.
First Dr. Wheelan claims that the idea that individuals know best is wrong. This is verified by people taking out terrible loans and making bad decisions. Yep, they certainly did make bad decisions. But does that mean that they shouldn’t think for themselves? People that made these poor decisions are paying for them, and that’s part of a process I like to call “life.” We make mistakes, we learn from them. I’d be willing to bet that most of those people won’t make the same mistake again. Plus, I think we’re overlooking that these people were given advice from people like Alan Greenspan and organizations like Freddie Mac, Fannie Mae, and his precious government. There’s a reason so many people made these poor decisions: they were given poor information. The takeaway here is this: People aren’t perfect. Nobody is making that argument. If people are left to make the best decisions for themselves, it will be better for society in the long run. It’s the reason we have advancement. And to argue that the companies made poor decisions: well, there were a few mandates pushed on them from Congress that actually led to many of those poor loans. The same Congress Dr. Wheelan wants to make our decisions for us. Oh, and when Fannie and Freddie guaranteed these loans, supporting the poor decisions made by people, that was probably not a good advertisement for government’s decision-making ability.
Wheelan’s next argument about firms always managing resources better than government is completely flawed as well, and he even tells you he’s wrong. The Fannie and Freddie are both the main culprits, and the push to get people who couldn’t afford houses to buy houses is EXACTLY the problem. He is saying that blindly eliminating regulations isn’t the answer, but I’m not sure who has ever said that it is. Bringing up the main reason for the current crisis (government intervention) is not a good argument for more government intervention. If we wait a little while, we’d learn that these banks get destroyed from bad moves, and the same mistakes won’t be made next time. Unfortunately, politicians can’t say “tough titties” to the American public, even if we need to be told so. I guess it is the government’s responsibility to fix it, seeing as they broke it. It’s just that every time they do that, they make things worse.
The next argument that Wheelan makes is annoying in that he completely misconstrues tax breaks. Nobody ever claimed that lower taxes are a “miracle balm,” as he calls them. Lower taxes are far more than that. They are the base for what any free economy should be. When he says that it helped lessen the already strong pain we’re going through, he’s missing the point. Taxes weren’t any part of this mess. If you want a good explanation of how we got to this problem, read the latest Forbes magazine where Steve Forbes himself gives a great rundown of it. Just so he we’re clear, the tax situation has nothing to do with the economic situation we’re in. All it did was increase revenue for the government and decrease the amount of money people had to pay, percentage-wise, to the government.
Again missing the point, Wheelan then says that the idea that hands-off government aided the current crisis. No, no, and no. The weak dollar strategy created by the fed along with what used to be called affordable housing for the poor and is now referred to as preditory lending were the two biggest catalysts. When Freddie Mac and Fannie Mae started putting a government guarantee behind really really bad debt, everyone became takers. Who wouldn’t invest in something government backed and think that it was risk-free? Well, the government entities made terrible miscalculations. Plus, nobody can pass the buck here. Individuals and companies did make really bad decisions. We need to let those who did feel the pain, or else it will happen again, probably worse.
His last point is a little bit useless. He says that mainstream economists don’t believe in the free markets. Well, not entirely. They believe in free markets with some regulation. Wheelan misrepresents this as these mainstream economists as believing in heavy regulations. Plus, who exactly is a “mainstream economist?” Alan Greenspan? That guy is now a proven dimwit.
OK, so maybe I went a little overboard in my execution examination of Dr. Wheelan. I guess I’m just trying to say that you can’t dismiss something as wrong without having seen it in action. Giving up on the free markets would be like giving up on a two year old kid. We haven’t seen them in action yet. What we’ve seen is an indecisive mess that tries to pretend to be free-market, but as soon as something happens that we don’t like, we throw someone under the buss (banks, CEO’s, the “rich”) and submit to the government to make our decisions for us.