2008 Woodie Awards
Government is problem, not solution
Michael McCarthy
Issue date: 10/7/08 Section: Opinion
Some people think that the "mortgage crisis" could have been prevented if there had been more government regulation.
But, the politicians who would provide this regulation are beholding to the very campaign donating mortgage lenders that they're expected to regulate.
BEWARE! What politicians call "managing the economy" really means using their tax, regulatory and spending powers to manipulate economic decisions. We don't notice the negative effects of this until we make the connections.
For example, the government used its regulatory powers to force lenders to loan money to people who could not afford home mortgages. So, when borrowers can not pay and lenders foreclose, the politicians try to "solve" the problem by loaning more "capital" to the lenders, or implementing more regulations or imposing a moratorium on foreclosures.
The prospect of not getting paid back has scared away all the "investment capital" so that, now, lenders have no money available to use for mortgages or loans.
Each government "solution" has its own interest groups, layers of regulations and list of "winners" and "losers" so that each solution creates new problems. This is how we get energy policies that promote use of scarce corn rather than abundant oil shale, electricity from Canada rather than near by power plants and oil from the Persian Gulf rather than the Gulf of Mexico.
Government policies have made it more profitable to import oil and consumer goods and to export jobs and wealth.
In fifty years we've gone from holding seventy five percent of the world's "investment capital" to now only twenty five percent.
We didn't notice this loss of capital because government just "borrowed" from Social Security and pension funds made "rich" by the contributions of 80 million "Baby Boomers." However, in the coming years, rather than save and invest, these retirees will try to live off the dividends of investments.
Doubling the "capital gains tax", for example, will only drive more "investment capital" out of the country.
But, the politicians who would provide this regulation are beholding to the very campaign donating mortgage lenders that they're expected to regulate.
BEWARE! What politicians call "managing the economy" really means using their tax, regulatory and spending powers to manipulate economic decisions. We don't notice the negative effects of this until we make the connections.
For example, the government used its regulatory powers to force lenders to loan money to people who could not afford home mortgages. So, when borrowers can not pay and lenders foreclose, the politicians try to "solve" the problem by loaning more "capital" to the lenders, or implementing more regulations or imposing a moratorium on foreclosures.
The prospect of not getting paid back has scared away all the "investment capital" so that, now, lenders have no money available to use for mortgages or loans.
Each government "solution" has its own interest groups, layers of regulations and list of "winners" and "losers" so that each solution creates new problems. This is how we get energy policies that promote use of scarce corn rather than abundant oil shale, electricity from Canada rather than near by power plants and oil from the Persian Gulf rather than the Gulf of Mexico.
Government policies have made it more profitable to import oil and consumer goods and to export jobs and wealth.
In fifty years we've gone from holding seventy five percent of the world's "investment capital" to now only twenty five percent.
We didn't notice this loss of capital because government just "borrowed" from Social Security and pension funds made "rich" by the contributions of 80 million "Baby Boomers." However, in the coming years, rather than save and invest, these retirees will try to live off the dividends of investments.
Doubling the "capital gains tax", for example, will only drive more "investment capital" out of the country.
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