Is there a problem? Absolutely. Does the government need to do something to fix it? Absolutely. What does government need to do? Get out of the way.
How do I justify this as a Catholic theologian (and not one with a degree, at that)? Quite simple. The free market is the best economic tool we (humanity) currently have for upholding human dignity in interactions between individuals and organizations through the freedom to contract.
Why has our money supply suddenly become constricted? As near as I can tell because of combination of bad or inept regulation, including:
1) government mandated mortgages to "empower" poor people to buy a home
2) government mandated current list pricing for mortgage securities, which in a stalled market is impossible to assess, resulting in the appearance of a lot more "bad" loans than are really there.
3) quasi/government banks (Fannie and Freddie May) showing exactly why government has no place participating in the free market because there is no one to watch for abuse in the free market when the government is involved. (so why would we EVER turn to the government to do more of the same with a bailout?)
The crisis seems to lie in the regulation usurping people's ability to freely make contracts. Government, get out of the way. Human dignity demands no less.
(For any puzzled by the theology and Catholic social teaching principles refered to here, please see here for all Catholic social teaching posts.
For an intriguing counter-view see here. Kudos to Fr. Dowd for weighing in, and it's well worth noting that we share a common faith and mission. He does a good job of explaining that our problem is a constricted money supply. He's right. But WHY do we have a restricted money supply? Giving more blood to a patient with clogged arteries won't increase the blood flow. What's needed here is angioplasty.
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1 comment:
Hello Deacon Patrick,
Thanks for the kudos. I like you analogy about the clogged arteries. I agree that the "patient" (i.e. the US economy) has clogged arteries, and that giving blood won't increase blood flow. The problem is that the diagnosis is not simply clogged arteries: it is uncontrolled bleeding. The blood flow must be staunched and the patient stabilized in order that the longer-term issue can be addressed. So, while we are looking at the problem from different angles, I don't think we are in fundamental agreement.
Blessings to you!
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