Bleeding Freedom

President Bush:

"I've abandoned free-market principles to save the free-market system," Bush told CNN television, saying he had made the decision "to make sure the economy doesn't collapse."

The dumbest thing he has ever said. The possible interventions won't help the economy. It'll only make the recession worse by prolonging it.

Some people got too much credit. Now, they'll be short on cash for some time. A few companies might go out of business. Their employees will suffer in the short run. But that's the nature of the system. It'll self-correct. If the government provides more money to the people who don't have financial and business sense, then they won't learn! They'll keep on making the same mistakes and in the future they'll hold out their hands again.

So not only won't the government help today but it'll set up terrible incentives for the future. "Protecting" people from failure is not the best policy.

Link via Vox.

Comments

[Laura(southernxyl)]

I know. What was he saving the free market from, except the free market system itself? A lot of the problems arose from abandoning those principles in the first place(loaning money the banks couldn't get back, for instance, and ignoring how the competition was kicking the car companies' butt, by simply making a quality product and controlling costs, until it was too late). If a business can't be made to work, stop trying to save it and do something else. If the free market system can't work, ditto.

This surprises and bothers me.

[Mike T]

Now that the fed has effectively dropped the interest rate to 0%, the credit problems will most likely end up getting a lot worse. Cheap credit is the poison that got us to where we are right now, and the only thing cheaper than 0% credit is "free money" being given to people from the federal government through inflation and borrowing from foreign creditors.

If Bush had a lick of sense, he would be proposing a bill that would immediately repeal the farm subsidies, medicare expansion, most of the transportation expansion and that would completely liquidate the Department of Education (the federal department that usually can't account for most of its budget, but that got tens of billions of dollars in additional budget under Bush) to make the burden lighter.