On a Nov. 20th NPR radio interview, David Wessel, Pulitzer-prize-winning Economics Editor of the Wall Street Journal sounded rather optimistic. Despite calling our present economy “as fragile as at anytime since Roosevelt took over,” he predicted that the Obama team would get right to work even before inauguration to hold off another Great Depression.
He said the challenge for Obama will be basically threefold: 1. like Roosevelt during the Depression, Obama will have to reassure the American people, that is “make us feel better,” by whom he appoints and how he describes the economic situation; 2. put together a huge fiscal stimulus package consisting of tax cuts and increase in government spending; and 3. deal directly with the housing crisis by helping people whose mortgages are worth more than the value of their home.
He summed up his personal reaction to the economic crisis by saying he was “quite impressed by the diligence of the people in the government who are charged with this and how creative they’ve been and inventive in trying to respond to it.”
In an October panel discussion at his alma mater Haverford College he explained the causes of the present crisis — that complicated interplay of Federal Reserve interest rates, the across-the-spectrum failure of economic checks and balances by rating agencies and regulators, the “democratization of credit” for homeownership, the “morally criminal” predatory lending practices, faulty assumptions about ever-increasing housing prices and unsecured lending by investment banks, and the under-appreciated connection between the housing market and banking system.
He then describes the timeline of the government’s reaction to each emerging crisis: a huge Fed rate cut in January, the historic loan to Bear Stearns (a non-Federal Reserve bank), the quick and efficient nationalization of Freddie and Fannie, Treasury Secretary Paulson’s sweeping authority granted by Congress, the $700 billion bailout legislated by Congress in a 400-page bill, Barney Frank, Democrat chairman of the House Financial Services Committee, being unable to refute the argument that “if you help Wall Street, why can’t you help Main Street,” and the spill-over protectionist reaction by central governments in Europe and Asia.
Mr. Wessel’s comment about the historic economic crisis: “I don’t think this was a problem caused by government, but government permitted it to happen.”
Despite a couple of disparaging remarks Mr. Wessel made about businessmen and choosing a career on Wall Street, maybe I can’t explain Mr. Wessel’s reaction to the crisis on the fact that he’s worked his entire career as a journalist and never as a businessman who has had to meet payroll, answer to shareholders, negotiate with unions, comply with regulations, pay ever-rising costs of employee health care, pay taxes, pay Worker’s Compensation taxes, hold the line on production costs, etc. etc. … and still survive.
I also can’t necessarily explain it by the fact that the college economics department co-sponsored the talk with the college’s Center for Peace and Global Citizenship, which:
“…exists to expose all members of the Haverford community, but especially students, to the key global issues of the day so that they can better equip themselves to help solve these problems after they leave Haverford’s campus. In this regard, the CPGC is one of the most visible examples of the College’s Quaker ethos, grounded in testimonies of peace, lives of service, and a concern for the world at large.” (emphasis mine)
Regardless, what I can say is that one of society’s best-recognized experts on the American economy makes absolutely no defense of capitalism in anyway whatsoever. He not only credits government in “creatively” tackling the crisis, he tacitly accepts the premise that government bureaucrats, regulators and legislators should play a fundamental and sweeping role in managing the economy. Furthermore, he flagrantly denies that government is the problem.
Yaron Brook, executive director of the Ayn Rand Institute, has spoken a lot about the economic crisis lately. He correctly explains that if capitalism is to survive, it needs moral sanction to counter the altruist ethics that infects our society today. As Objectivists know, Ayn Rand provided that philosophic moral justification for the total separation of state and economics: the morality of rational egoism.
We have a separation of church and state that is explicitly spelled out in the Constitution, and yet we still are fighting tooth-and-nail against the Religious Right to uphold it.
And we don’t even have that much of an explicit defense of capitalism. How then is capitalism to survive in an environment when leading knowledgeable and educated intellectuals like Wessel can look the facts straight in the eye, and be blind to the conclusions?
As Dr. Brook states in his talks, obviously the fact about capitalism’s success is simply not enough; the fact that government interference in the economy wrecks havoc is simply not enough. We must make the moral argument that laissez-faire capitalism is not only practical, it is morally right.