Too frequently I find myself in debates
with the typical Democratic voter and they will repeat the same
rhetoric they get from peers and the 6 pm news.. Five minutes into
the conversation they have the doe in the headlight look. Once I
begin explaining basic finance and use words like Quantitative Easing
and Rehypothification, they run away.
If they do stick around past that
point, the moment I mention the free market they point to what they
believe are faults in capitalism. They tell me how it was capitalism
that caused the crash of 2007, and how the greedy bankers are taking
people's homes. They tell me how companies like Monsanto are
poisoning everyone. I could go on, but you get the message. Everyone
knows all the arguments.
I must then explain to these people we
have not had a free market in modern history. Not since Wikard versus
Filburn have we come close to a free market. This opened the door
for federal regulation of almost everything produced in America. All
the problems mentioned above, and then some, are done with
cooperation from the overseer government.
The average person believes the
solution to all market problems is more regulation. This is despite
there was already regulation in place that is suppose to protect the
employee or consumer. I find it almost impossible to explain how
government is often a part of the problem and rarely the solution.
Let's drift back to 2007 once more when
the housing bubble began deflating. Many people who consider
themselves the educated and informed will point to the weakening of
Glass-Steagall as the root cause. In a sense they are correct. If
Glass-Steagall had remained intact that would have kept the banks
more stable. This thinking is the same as a doctor treating only the
symptoms of a terminal illness.
Preventing the problems that caused the
2007 decline would have been the better solution. The root cause of
the 2007 economic collapse was government interfering in the housing
market. Since the 70's government has been forcing lending
institutions to give mortgages to people who were higher risk. In
1998 Clinton increased the number of people who qualified for
mortgages. Then came the normal downturn in economy.
Because mortgage holders were living on
the edge and then had working hours cut back, or they were laid off,
they could no longer make payments. The banks then began foreclosing.
Then came a government created problem. The government had allowed,
and in some cases forced lending institutions to sell those mortgages
to securities companies. They bundled those high risk mortgages and
sold them at premium prices. As home owners defaulted the securities
that held their mortgages began to drastically lose value. This sent
economic ripples around the world.
It's clear to those of us that looked
deeply into the crisis that the free market wasn't at fault, but its
manipulation by government. The economic cycle is a sine wave, a
line that curves up and down. Progressives believe they can make the
economic line straight, removing the ups and downs. The Great
Depression is a perfect example of their attempts at controlling
the economy.
Life won't be perfect under a true free
market economy, but it's not under the current system. All I, and
many like me, ask only that a true free market economy be given a chance.
One cannot say that a free market doesn't work because it hasn't been
tried in this country, or any other that comes to mind. This doesn't
mean removing all regulations from the market, at least on the state
and local level. Almost all federal regulation will have to be
dismissed. The free market always fights for survival. In the USA
and around the world we find the the underground market being the
freest.
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