Voters are venting their anger principally on Republicans who they see as responsible for the current financial mess. Republicans deserve what they get, but not because they bear most of the blame for trashing the economy; Democrats in this case are much more culpable. Rather, they deserve the wrath of the voters because John McCain and company do not offer them what will change anger into constructive action and help as well to create a political culture more conducive to freedom: an actual understanding of the causes of the situation.
In the first two presidential debates and the one vice presidential debate, Democrats Barack Obama and Joe Biden respectively began by blaming the current Wall Street and banking crisis on a failure of eight years of deregulation by the Bush administration and John McCain, and they offer us the same old class warfare rhetoric and big-government solutions. For their part, McCain and his VP nominee Sarah Palin have countered by denouncing the greed of Wall Street and declaring that they will crack down on it.
McCain’s use of the emotive and confusing word “greed” offers not understanding but further obfuscation. Does wanting to be prosperous and rich constitute “greed?” If so, most of us are greedy and greed is a good thing. Does it mean wanting to become rich by stealing from others? In that case it’s certainly wrong. But it is absurd to suggest that the current crisis is simply a matter of a bunch of Wall Street brokers and bank executives somehow using force or fraud to enrich themselves.
This use of the word “greed” simply stokes anger against individuals who might or might not deserve our wrath—we simply don’t know. Ignorance and uncertainty about the real causes of the crisis leads to a sense of helplessness and fear. This, in turn, can lead to a desire to strike out blindly at any convenient enemy, in this case the “greedy rich.” McCain seems to hope that voters will turn to him to do the clubbing.
But this game of bashing the rich is the modus operandi of the Democrats. So why vote for McCain out of fear? Why not go with the real pros?
A principal factor in the current crisis was government regulation rather than deregulation.
It might be the case that McCain himself doesn’t understand the nature of the current crisis. He appreciates some aspects of how free markets operate but not enough to offer the voters a consistent picture that will illuminate the current crisis. Or perhaps McCain’s understanding might be impaired by his anti-individualism and belief in a common good that requires us to work for some cause beyond ourselves.
By contrast, what would be possible if McCain or any other politician accepted the moral right of individuals to live for themselves and understood the fundamentals of economic liberty? How could they help voters think about the financial crisis? Sure, the current crisis is complex and has a number of causes. But even a candidate in a debate or TV spot can offer clarity.
“The 1977 Community Reinvestment Act, which was amended a number of times in the 1990s, in the name of stopping alleged racial discrimination in mortgage lending, allowed federal regulators to induce and force banks to make very risky loans. Banks were to disregard sound lending practices and to ignore the fact that borrowers couldn’t make normal down payments and didn’t have income that would best ensure that they could meet their payments.”
You can recite those sentences in 30 seconds and they allow the listener to understand that a principal factor in the current crisis was government regulation rather than deregulation.
Let’s try another one:
“Fannie Mae and Freddie Mac are government sponsored enterprises. Got it? Government sponsored enterprises! They purchase and resell bundles of risky loans with implicit government guarantees. Without Fannie’s and Freddie’s implicit guarantees, many of those bad IOUs would not have been purchased by so many banks that now are collapsing as defaults rise.”
Again, under 30 seconds and now the listener has a bit more crucial knowledge.
Let’s go for three:
“Private enterprises—banks, investment houses—risk their owners’ money and that risk gives owners a strong incentive to act soundly without government regulations. On the other hand, governments with all their offices and agencies, departments and divisions, wield political power, that is, the use of force. In a free society, they must be subject to lots of constraints, limits, checks, and balances if they are to protect rather than endanger individual freedom. Government sponsored enterprises are technically private but, really, are neither fish nor fowl. They enjoy special government favors, are exempt from many regulations that restrain government agencies but aren’t completely subject to market discipline. And that was the problem with Fannie and Freddie.”
Okay, that was a bit longer, but still only a minute. And it added yet another piece of information that now has the listener thinking, “What the hell are the Democrats talking about when they damn ‘eight years of deregulation’?”
It seems that McCain just doesn’t understand what’s going on in the financial sector. The Democrats probably understand the crisis better. They should. After all, they are strong supporters for the Community Reinvestment Act and they blocked attempts in recent years by the Bush administration to place restrictions on Fannie and Freddie. But their ideology favors control of the economy and stifling of economic freedom. Thus they are happy for the confusion about the current crisis that allows them to blame freedom and greed and to assert the need for even more government control.
It is dangerous to allow government to have extensive and unchecked powers to regulate.
Ignorance about the causes of the financial crisis gives us insights into the broader and crucial role of critical thinking and understanding in political culture. It is through the use of our minds and critical thinking that we understand the world around us and thus can act for our own survival and happiness. And because we need to understand and act, we require individual liberty in society with others and should deal with one another based on mutual consent rather than the initiation of force and fraud. In the absence of freedom, in a society that is dominated by government regulation and regulators, individuals won’t need to understand or think because they won’t be able to act for their own well-being in any case.
On the other hand, a political culture that supports freedom depends upon citizens who understand universal moral truths; who understand that “economic freedom” is simply another way of saying “free to think and act as you choose”; and who understand the dangers of allowing the institution called “government”—which is meant to protect individual freedom—to have extensive and unchecked powers to regulate.
Understanding these truths is no guarantee of right moral action. Often those who obfuscate do so because they know that their own moral premises are questionable. They want to run the lives of others by force. That is pretty much the program of the Democratic Party—and the Republicans are not that far behind. But understanding strips away any disguise, reveals real goals and motives, and makes it more difficult for others to deceive us.
So let’s first and foremost be angry at ignorance and strive to promote the understanding and critical thinking that will head off government-created crises in the future.