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When the Solution is Part of the Problem

By William Warren

“In this present crisis, government is not the solution to our problem; government is the problem. From time to time we've been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. Well, if no one among us is capable of governing himself, then who among us has the capacity to govern someone else? All of us together, in and out of government, must bear the burden.”

—Ronald Reagan, First Inaugural Address

It is simply baffling that in a paltry 28 years, a nation can devolve from a President who utters such profound wisdom championing the merit of the free citizen to a President who hopelessly defaults on more bureaucracy, more regulations, and more government. In his own words, President Obama recently declared:

“It is only government that can break the vicious cycle.”

Well, government may break a lot of things, but the current vicious economic cycle will hardly be abated by any more action at the hands of Barack Obama, Nancy Pelosi or Barney Frank. Especially when government action and interference in the marketplace triggered this entire fiasco to begin with.

Now, with government eager to insert itself deeper and deeper into the free market via such exorbitant proposals like the “stimulus” bill, banker bailouts, and mortgage buyouts, individuals across the country are fuming.

The latest individual to talk back to Barack Obama and his Big Government agenda was none other than CNBC's Rick Santelli speaking from the Chicago trading floor. In case you missed the video—doubtful, considering its lofty position at the top of the Drudge Report all afternoon Thursday—the angered and unfiltered Santelli said what has been on the minds of many Americans as of late:

“The government is promoting bad behavior, because we certainly don't want to put stimulus forth and give people a whopping eight or ten dollars in their check and think that they ought to save it…

“How about this President and new administration: why don't you put up a website to have people vote on the internet as a referendum to see if we really want to subsidize the losers' mortgages, or would we like to, at least, buy cars and buy houses in foreclosure and give them to people who might actually have chance to prosper down the road and reward the people that carry the water instead of drink the water…

“This is America, how many of you people want to pay for you neighbors' mortgage that has an extra bathroom and can't pay their bills? President Obama, are you listening?”

Speaking on the subject of Government using taxpayer money to buy up bad mortgages, Mr. Santelli's tough questions to his fellow Americans and the President alike certainly need to be asked.

However, the real question goes even deeper. Quite simply: Why are we debating this to begin with? How did our country's homeowners find themselves in such a dismal position?

For starters, it all began when the old joke “I'm from the government and I'm here to help you” began to ring true. For when things got sour for struggling homeowners in America, the free market was never allowed to resolve the dilemma in a natural, organic way. Conversely, the navel-gazing Government enthusiastically intervened.

Instead of allowing troubled homeowners to negotiate with the banks as partners on an equal footing, government funneled money into the banks' accounts, corrupting the delicate relationship and putting the lenders in a position of artificial superiority.

And now the joke's on Harry Homeowner.

Commenting in the National Review on last year's “foreclosure-prevention” bill—more accurately regarded as a bank bailout—Dr. Lawrence A. Hunter conveyed the dangers of government becoming a third party in lender-home owner dealings:

“It is a government handout for the banks, not a hand up for homeowners. But it is worse than simply a waste of taxpayers' money; it will upset the fragile equilibrium that currently prevents a tsunami of foreclosures from washing across America and drowning millions of American homeowners who are in precarious financial condition and upside-down in their homes.

“Currently, banks are allowing many delinquent homeowners to remain in their houses as long as they pay their property taxes and keep their homeowners' insurance policies paid up. This is not ideal but it is a temporary, market-based solution that could give the housing market time to right itself if the government would get out of the way, stop meddling, and force banks to come to grips with their real financial situation in today's economy without waiting for Uncle Sugar Daddy to bail them out.”

This “fragile equilibrium” between homeowners and lenders is merely a microcosm of the equilibrium between free markets and free people. Whenever government intervenes—as it has with mortgages, banks, corporations, and more—the equilibrium is upset and a myriad of problems ensure.

And then, in typical government fashion, people like Barack Obama claim that “only government” can alleviate the crisis.

The ultimate vicious cycle, therefore, is not one of an economic nature. Rather, it is the downward spiral in which Big Government triggers crises and then prescribes even bigger government as the solution.

Hopefully the real solution—the palliative prescriptions of the free market to which Ronald Reagan alluded nearly three decades ago—will again be allowed to manifest themselves.
And the “vicious cycle” of government “solutions” spawning ever greater government problems will again give way to enlightened self government “for, by, and of the people.”

William Warren is a contributing editor of ALG News Bureau.


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