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Commentary: Blame government for this mess

Raymond Keating
Dolan Media Newswires

Long Island, NY — Did you ever notice how some politicians proclaim they don’t play the blame game or point fingers? Of course, others relish blaming so-called greedy, evil business for all our ills.

But such politicians usually want to divert attention from their own culpability in whatever mess needs cleaning up. After all, when the economy goes seriously awry, it’s almost always due to government doing something dumb.

As an economist who appreciates history, I like the blame game and trying to figure out how we got to wherever we happen to be. To get public policy right, we need to understand past successes and failures.

Regarding our poor economy, Thomas Sowell has written an important book titled “The Housing Boom and Bust.” Sowell is an economist, historian and columnist.

Our current economic woes, as Sowell notes, started in local housing markets, then spread to national and international financial markets. But how and why did this happen?

Sowell makes clear that misguided political actions were central. He explains how local land and building restrictions drove up housing costs. Politicians at the federal level nationalized cost problems from certain localities in a crusade for affordable housing.

Sowell also reviews the decline in lending standards and the dramatic growth in risky means for financing home purchases, including interest-only and adjustable rate mortgages, along with the inability of rating agencies to assess “new and exotic mortgages.”

But, again, why the big shift away from sound lending? Sowell reports: “Members of Congress from both political parties have urged federal regulatory agencies to press banks and other lenders to lower mortgage loan requirements, and have passed legislation to that end and to subsidize or guarantee loans made under lower standards.”

Bottom line: Politicians pressed lenders to give mortgages to people who should not have gotten those mortgages.

Given all the problems created by government, Sowell raises serious questions about the current agenda of still more government “stimulating” our economy. His methodical dismantling of the New Deal myth is important given that so much of federal policy today seems based on that frenzied period of government activism.

What should be learned from the New Deal? Sowell writes: “The lesson that seems more consistent with the evidence is that massive and unpredictable government interventions in the economy create uncertainties as to what government is going to do next — as well as uncertainties as to what the actual economic consequences of government policies will turn out to be.” Uncertainty scares business and investment.

Government got us into this mess, and no evidence exists that more government will improve matters. Let’s hope some of our elected officials read “The Housing Boom and Bust” and figure that out.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

One comment

  1. AMEN.
    Who else can be directly responsible for problems, and then sit back as some sort of ‘unaware spectator’, who then casts blame, declares it a crisis, and determine themselves to be the only ones who can fix it. Only their ‘fix’ makes things worse, and they do even more of what they shouldn’t have done any of in the first place.
    Politicians love to point fingers, yet all those pointed at, do not make laws, do not make regulations, or impose taxes, only the politicians pointing those fingers can. Guess what we end up with…exactly what they want! Do you really think they’re surprised at all this? Hell no, they caused it! Call it…job security. If they wanted lower taxes…we’d have them. If they wanted better health care…we’d have it. If they wanted lower energy costs…we’d have them. If they wanted energy independance…we’d have that…Starting to get the picture? These 500 some odd elite politicians control it all (we…eat cake). The sad fact is, with the current level of government intrusion, there is no longer a ‘free market’ as once existed, and intended, for in their twisted world…that’s bad, as they would no longer be seen as necessary.
    The founders never intended for these “representatives of the people” to be full time, career politicians. That level of power and control in government, is a primary reason they journeyed to this new land, and established this new nation, to escape tyranny. They were to be ‘representatives of the people’, who came to Washington with the wishes of the people, worked out a budget and essential laws, settled those issues and went home, back to work in society, at real jobs. Nothing good comes from a politician, whose full time job is to think up new laws and more regulations. What they do, no longer even remotely resembles representative ideals of the people, but rather an increasing of their power and control over the people they claim to represent. You see, most politicians have never actually worked ‘in the real world’, or tried to run a profitable business under all the laws they create, and if they had to, rest assured they would govern far differently. The notion that a politician would be in Washington, full time, for 15, 20, 30 years or even longer is absurd, and the founding fathers must certainly be spinning ing their graves, for in roughly 200 short years we’ve escaped a brutal tyranny, only to create our own new tyranny, arguably more oppressive than the first!.
    Did you ever wonder why politicians raise and spend millions of dollars, to attain a job that pays roughly $150,000 a year? Answer: Power, Control, and a ‘gold plated’ lifetime pension benefit we could only dream of…but pay for and provide for them via overbearing taxes, as we starve on a bankrupt social security system.
    So who’s really getting rich off the backs of the poor? Is it government or Wall st.?
    What’s the bigger problem, runaway capitalism, or runaway government?
    It is for this reason, that you see a ground swell of ‘Tea parties’, for I believe another tax revolt is soon on the horizon. Government cannot become this large, and over-bearing, and still be called a representative republic.
    I say:
    Term limits, two terms max.
    No lavish pensions…EVER! Why? $150,000 a year and they can’t somehow put together an IRA like the rest of us do? We’re told that they are some of the best and brightest among us…Really? Let’s put the ‘Service” back in civil service.
    No exemptions from laws they create, and if universal healthcare is imposed on us, they better be under the exact same plan.
    Currently, most laws and regulations they impose on us, they themselves are exempt from. Does anyone actually believe the government healthcare that we’ll be getting will in any way be close to what they have?
    If you do, PT. Barnum has best described you as one of those, born every minute.

    In case you didn’t notice, I made no mention of, nor do I blame either political party…they’re both equally guilty!!

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