(G)overnments have regulated and subsidized the housing and financial industries for years. Fannie Mae and Freddie Mac were created to interfere in those markets. Had actual private companies invested in those mortgages, they would have been subject to market checks. But they were not. The results were predictable.
Now we will get a new onslaught of regulation. This intervention will fail and stifle innovation because, as Adam Smith and Friedrich Hayek taught, markets are too complex to manipulate beneficially. Life works best when decisions are bottom up. But pundits have no clue about spontaneous order. Instead, they talk about who will "run America."
This faith in political solutions thrives in the face of repeated government failure. Big farm bills have raised the price of food and squeezed out small farms. Campaign finance reform made it harder to challenge incumbents. FEMA couldn't deliver water to hurricane-ravaged New Orleans as well as Wal-Mart did. Medicare has a $35 trillion unfunded liability over the next 75 years.
Yet the media and political class call for more government control. What puzzles me is why citizens don't act like the skaters we tried to boss around. The skaters wanted freedom. Citizens might desire this too, but the political class assumes they want and need direction.
"It's like we believe that when one man is chosen to be president, suddenly he rises above all the rest of us." says the Cato Institute's David Boaz. "Suddenly politicians can do anything: give us health care, better lives, better jobs. But politicians can't do most of that stuff."
"Fortunately," he adds, "Most of life is outside the government sector." That's the part of life that keeps getting better.
Something to keep in mind when you pull the lever on election day.
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