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The Daily Wildcat

The Daily Wildcat

 

    The death of the free market

    As financial catastrophes hit Wall Street in the last few months, I grew optimistic. I hoped that politics might be transformed, and the two major parties might realign around the financial crisis, returning to a post-World War II economic worldview where the question between major parties was “”how should the government intervene in the economy?”” and not merely “”should the government intervene?”” Conservatives might realize that big government, in some cases, is a necessary evil to protect people from the ravages of big business and the capriciousness of the market.

    Boy, was I wrong.

    In case you’ve been asleep for the last week, stock markets imploded Monday when the House of Representatives voted down a $700 billion bailout package for Wall Street.

    There were many reasons to oppose the bailout. Most people didn’t understand the horrifying effects that continued Wall Street failures would have on every sector of the economy. Others objected to specific aspects of the bailout bill, such as the fact that it gave Treasury Secretary Henry Paulson a blank check or that it didn’t do enough to help the middle class.

    Republicans, meanwhile, apparently opposed it because of a blithe commitment to the belief that government interference amounts to communism. These Republicans feel that the bailout package is welfare for people who made poor financial decisions, who should pull themselves up by their bootstraps (an unfortunate metaphor, since pulling yourself up by your bootstraps is impossible).

    Indeed, conservatives laughably argued that government intervention caused the crisis, as Rep. Ron Paul, R.-Tex., did in a Sept. 29 article. Rep. Darrell Issa, R.-Calif., presented the even more ludicrous view that “”we are ending the Reagan era if we vote for (the bailout).””

    One major flaw at the heart of modern conservatism is the use of the word “”economy.”” Up until about 2006, you could have criticized just about any aspect of the Bush administration and one of his defenders would have told you, “”Ah, but the economy is doing well.””

    To these people, “”economy”” is a magic word, a singular entity and a self-fixing machine. It’s interchangeable with the magic phrase “”free market,”” and its progress is encapsulated in a single number like the GDP. Such people have a childish, Econ 101 understanding of economics, according to which economic growth always benefits from minimal regulation, as well as the religious belief that whatever benefits the economy is good, no matter what.

    There are two fatal flaws here. First, treating the economy as an abstract object robs fiscal and financial policy of its humanity. Statements about “”the economy”” overlook the problems individual Americans face even during periods of economic growth.

    True, outsourcing lowers prices for the rest of us, but having your job shipped to China sucks in a way that can’t be quantified. Not having socialized health care helps keep taxes low, but this doesn’t comfort the millions of Americans who have declared bankruptcy due to health care costs. The GDP has risen over the last eight years, but that means nothing to the median wage earners whose inflation-adjusted income has stayed constant despite growth.

    The second flaw is the belief that the free market “”regulates itself.”” This belief is founded on faulty assumptions such as the idea that humans are rational actors who behave according to their own best interest, which economists and behavioral scientists know is not true, as well as the view that government noninterference is always a good thing for the economy. I’m sure you can think of many counterexamples.

    Republicans would do well to tap into the spirit of such presidents as “”Ike”” Eisenhower, a “”free-market conservative”” who nonetheless expanded the New Deal and injected funds into the economy, and Teddy Roosevelt, a trust-buster who realized that the free market, like any machine, needs maintenance.

    On “”Larry King Live,”” Ben Stein mournfully stated Wednesday that “”Bush, the giant deregulator of free markets, is going to go down as the man who killed them.”” For what it’s worth, I hope he’s right. Evidence is mounting that the free market need not be a target of conservative idolatry – it’s just time for the ideology to catch up.


    – Taylor Kessinger is a senior majoring in ecology and evolutionary biology, math and physics. He can be reached at letters@wildcat.arizona.edu.

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