Not ‘That’ Much Government
With the announcement that the various levels of the U.S. Government are going to work to directly stabilize the market, I found this commenting on the issue of government in general and regulation, or its intervention in an otherwise traditional free-market system. I agree in principle to some of the points being raised, but I don’t believe this is a ‘return’ to any type of big government, and I don’t think the U.S. has ever (during the last few presidencies anyway) been practising “raw capitalism” as Paulson states. The very fact that the government is employing this effort to try and help is in and of itself evidence that not only the government can do something (though it’s still up in the air what the long term effects are going to be) but that it was structured to be that way. The issue has always been, and summed up with in the TNR article:
The tragedy is that none of this was necessary. Regulators looked the other way when investors borrowed heavily to increase their potential profits, ignoring the growing risk of failure and its impact on the economy. They failed to prohibit mortgages that could never be repaid and to head off the resulting wave of foreclosures. It turned a blind eye to fraudulent short-selling and to rating agencies giving top grades to shaky bonds.
In effect, the government is being forced to, as a result of this crisis, pay more attention to its regulation and work to making sure they’re actually being enforced. This isn’t an expansion of government, but more a refocusing of government into already existing priorities.
Now, this could be argued as a more expansive role of government in general if it comes to pass. But then you’d have to ask whether a more proactive government in matters of health care, education, etc. is actually what may be needed to reform some areas which currently aren’t nearly providing enough.
