Posted 5:45 PM by steve

It comes as no surprise that that Obama's cure (and Clinton's as well) for what ails the economy involves more government regulation and intervention in the marketplace. When one, as is the case with Obama, has spent their entire life working in government (or government affiliated activities), one tends to see government as the solution to problems; put another way, every problem is a nail calling out for the hammer of government. They're unfamiliar with the private sector, and as such, they're not going to have any confidence in the self-correcting mechanisms of Adam Smith's 'invisible hand'.

The opposite holds true for those working in the private sector (such as yours truly), who think the market is well-equipped to regulate itself and that government intervention ought to be the exception and not the rule. We see how companies that screw their customers and shareholders don't last long, and how new competition springs up where existing companies aren't doing right by the customer. We see how companies that make mistakes have to change their behavior if they want to keep going.

As for how this plays out in the current climate, we believe government action is not needed to prevent a recurrence of the sub-prime bubble/debacle, as investors have well learned their lesson and aren't going to be throwing their money away again (at least not in the sub-prime market). What Obama and Clinton are proposing is akin to passing a law that forbids a kid from sticking his finger into an electrical outlet... after he has already done so once; the law is totally unnecessary as the kid has already learned his lesson and doesn't need government to tell him not to do that again.

It would be one thing if more government regulation was able to prevent the next problem. But just as generals are always fighting the last war, regulators and big government types are always regulating the last round of problems, they're not looking forward. And that presumes they would be able to see the problems in the road ahead.... after all, if people with decades of working experience whose livelihoods depend on their being able to look ahead can't accurately gauge the future, why should anyone believe a bureaucrat or politician, especially one who has never worked in the real private sector, is going to be any better to forecast the future?

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