Liberal opinion columnists are climbing out of the woodwork to declare capitalism a failure and beat the drums of yet more interventionist policies. This despite the fact that these very interventionist policies plunged the nation’s economy into its current abyss.
In the March 18th Washington Post, the always predictable E.J. Dionne, Jr. writes in “The Street on Welfare” that it is necessary for the government to intervene in the economy, such as the Fed bailing out Bear Sterns:
“Bernanke deserves credit for ignoring all the extreme free-market bloviation. He doesn’t want the economy to collapse on his watch, so he is willing to violate all the conservatives’ shibboleths about the dangers of government intervention. As a voter once told the legendary political journalist Richard Rovere: ‘Sometimes you have to forget your principles to do what’s right.’
“But if this near meltdown of capitalism doesn’t encourage a lot of people to question the principles they have carried in their heads for the past three decades or so, nothing will.
“We had already learned the hard way — in the crash of 1929 and the Depression that followed — that capitalism is quite capable of running off the rails.”
Au contraire mon frere! The current monetary crisis is of the Fed’s own making through central bank interventionism – by setting up favorable conditions for bad loans with low interest rates and by increasing the money supply in general. This in turn has beat down the dollar, which threatens to spark an inflationary recession.
The liberal line remains the same as it has since the Great Depression: capitalism has failed – or in Dionne’s imagery, “run off the rails.” We were hearing this from the communists and fascists overseas then, and the arguments remain the same now. As before, the interventionists believe that it is up to government to fix the mess – which interventionism ironically created – and that means a new economic order with even more intervention. This is a pure grab for power by the socialists.
Dionne’s piece dovetails on Paul Krugman’s March 17th column, “The B Word”, where he argues for a tremendous government bailout of our financial institutions on a much larger order than the $30 billion Bear Sterns bailout:
“The U.S. savings and loan crisis of the 1980s ended up costing taxpayers 3.2 percent of G.D.P., the equivalent of $450 billion today. Some estimates put the fiscal cost of Japan’s post-bubble cleanup at more than 20 percent of G.D.P. — the equivalent of $3 trillion for the United States.
“If these numbers shock you, they should. But the big bailout is coming. The only question is how well it will be managed…[T]he important thing is to bail out the system.”
Actually, what is important is to get the engine of capitalism back on track and running under full steam. And the way to do that is to remember conservative’ shibboleths on the dangers of interventionism and return to our founding principles.
ALG Perspective: It is not capitalism that has failed. It is the far left’s absurd obsession with a “mixed economy” where government imposes huge costs and regulations, attempts to determine winners and losers, rigs the system for a few select insiders, and then blames the victim for the crime.
