Deregulation has failed. The free market has collapsed. The era of economic capitalism is over.
If you’ve been listening to the pundits, that’s all you have been hearing about our economic crisis. Far from an image of reality, these are the left’s talking points that are fed into the media by the Obama campaign and other interest groups.
Let’s be blunt. Things are bad. For the entire 2000s we overspent, overborrowed and overlent, occurrences in an economy usually leading to a recession. However, this has been coupled with Wall Street’s major firms like Fannie Mae and Freddie Mac actively engaging in the excessiveness, signing out lucrative “sub-prime” loans to risky individuals. The effects of the economic slowdown were intensified because a portion of Wall Street was invested in such deals. Next thing you know, we have a financial meltdown on our hands.
The crisis immediately affected the 2008 presidential election. McCain’s three-point lead flopped into a seven-point Obama lead. The Democrats’ slogan of “the failed Bush policies” became suddenly easy to visualize as stock markets everywhere plummeted.
It’s a stretch to say that the era of capitalism is over.
The Obama campaign has shamelessly hammered the d-word (“deregulation”) into the heads of Republicans, saying that the Republican quest to deregulate the marketplace for the past 30 years has resulted in an economic catastrophe. This is not entirely accurate.
Fannie Mae and Freddie Mac, among others, were encouraged and sometimes threatened to accept the damaging sub-prime loans from low-income households by the federal government – particularly the Democrats in Congress. Their 1977 Community Reinvestment Act tried to find ways for banks to accept mortgages and loans that they really did not want, a policy for which activist groups like ACORN have vigorously and aggressively campaigned.
Ironically, it was actually too much regulation, not too little, that compounded it. It should also be noted that Fannie Mae has donated over $100,000 to Obama’s campaign. Obviously, they liked those loans.
The Republicans are not innocent either. While the Democrats were constructing these policies, the Republicans should have been saying something – anything.
Republicans had a significant Congressional majority for six years and did not do anything to stop it. Republicans also let companies buy and trade mortgages, an obviously risky practice that would have drastic consequences for the taxpayers if it failed.
Still, there are not many signs that capitalism is on the verge of death. Yes, the federal government has nationalized many banks by taking ownership in them, but this has not been greeted enthusiastically by the American people, some of whom are less than pleased with the bailout plan. This is no Bolshevik revolution. For as bad as Obama says things are, he still advocates tax cuts and free trade. Anyone would be committing political suicide to start chanting “regulate!”
The only way the free market could be destroyed is if the government does it silently behind our backs. As informed citizens, it is our duty to make sure that does not happen.
The writer, a sophomore majoring in political communication, is a Hatchet columnist and a member of the College Republicans executive board.