I like much about John McCain’s positions on various issues, and those that I disagree with categorize very neatly: they are the issues where McCain’s position denies the basic truth that nearly everyone acts in what they perceive as their own best interest, nearly all the time. Essentially, I think McCain fails to appreciate the incentives to do wrong that are created by some of his programs and proposals, even though he means them to do right.
On “campaign finance reform”, new incentives for all kinds of skullduggery were created (and fulfilled) by the George Soroses of the world. And the media who were given even MORE power by the muzzling of free speech were, of course, effusive in their praise of the idea.
For “comprehensive immigration reform”, McCain simply didn’t grasp that its approval would be a green light for many million more illegals to enter the country clandestinely, unless the fence was built FIRST, and enforcement radically ramped up, well before any regularization of existing illegals was even contemplated.
Now McCain is talking about the greed of Wall Street zillionaires who are fleecing America. While that may sometimes be true, the real fleecing has been done by a corrupt partnership of government regulators and business, in “government/private sphere” partnerships like Fannie Mae and Freddie Mac, which were supposed to be supervised by government, but in practice were in collusion with it instead. I don’t mind if McCain bashes crooks, as long as he identifies all their accomplices in the regulatory apparatus.
It isn’t a matter of regulating the unregulated. It is a matter of stopping the government incentives for business to take risks they cannot sustain (assuming the government is backstopping them). And most especially, it is a matter of the government ceasing to attempt repeals of the laws of economics, the first of which is that “everyone acts in what they perceive as their own best interest, nearly all the time”. From this comes the “law” of supply and demand, but it’s really a corollary to the main point. The law of supply and demand is really just an observation about how prices are set, and how prices interact with supply and demand. Underlying this is the central fact of human self-interest.
The desire to do good, to control things so that bad things won’t happen, is a natural one. But it is no part of a free society, when it involves government trying to get business to act outside its own interest. There will be mostly good effects on society when enough businesses act in their own interest, in a free market where the rule of law prevents violence and the breaking of contracts.
Congress is more to blame than anyone else for the current mess in housing and finance, because starting in the 1990s a sustained program began to try to widen home ownership to people who simply could not afford it, and were not reliable recipients of risky loans. There was bound to be a comeuppance sooner or later, and we will all pay it now. The market is not the place to tinker and micro-manage with the intent of creating particular outcomes for particular people. There are a great many people now in foreclosure who would have been much better off had they not been tempted into taking loans they really could not afford, by loan officers who were just following procedures created by their companies, which were themselves responding to Fannie Mae/Freddie Mac guidelines, which had been distorted because of a Congress and administration that wanted to “widen home ownership”.
I hope, oh, do I hope, that John McCain will listen very carefully to Mitt Romney on these issues, and not go off on some populist crusade that denies the essential laws of economics.
In the meantime, Obama’s economic advisers include people who were up to their eyeballs in Fannie Mae/Freddie Mac excesses, like Jim Johnson and Franklin Raines.
So, yes, Senator McCain, when you’re President, as I hope you will be, take a good look at how the government/Wall Street relationship is corrupt, but please don’t think it’s just a matter of adding another layer of bureacratic regulation from the government over Wall Street. Who will regulate the regulators? I think you know the answer to that, if you consider it carefully.
