I had the honor of meeting and assisting Pat Toomey last week at the Conservative Leadership Conference here in Las Vegas. This morning, Club for Growth says/releases the following (excerpted):
Eighteen months into the credit crunch, many largely capitalized financial services firms are experiencing serious difficulties but the overall economy continues to grow. GDP growth over the past 12 months was 2.25 percent and 3.5 percent when excluding the drag imposed by the housing sector. Even within the financial sector, many banks are doing well. Regional bank indices had risen significantly since the lows of last July—prior to the bailout announcement—and thousands of community banks are thriving. It is extraordinary that a massive government intervention in the economy is considered inevitable when the economy is not even in a recession.
Indeed it is. On what is the panic of Wall Street types based? Could it be fear that lack of liquidity and credit in the market will affect their own bank accounts?
At the same time, socializing economic risks come at a great cost to the American economy by misallocating capital, inviting political manipulation, and putting taxpayers on the hook for possibly a trillion dollars. Such a large takeover by the government will surely be accompanied by adverse, unintended consequences. Already, other companies and industries are lining up at government’s door asking for their own bailout. And if the government incurs $700 billion in debt to finance the purchase of bad bank assets, the danger that it will eventually monetize that debt and trigger dramatic inflation is very worrisome.
“Unintended consequences.” This concept is one of the great underlying tenets of conservative thought. The idea is that when one makes broad, sweeping changes there are always unplanned effects, and they are often worse than the problem with which you began.
Our Do Nothing Congress should, in this case, do nothing (other than what Newt said yesterday). We ought to free things up where we can, allow the market to self-correct, and let those who must (and should) take their proverbial Lumps.
Access to unlimited cash and credit is not a “human right,” and we should stop behaving as if it is.