Former President George W. Bush fired a salvo at President Obama on Wednesday, asserting his administration's interrogation policies were within the law, declaring the private sector not government will fix the economy and rejecting the nationalization of health care. "I know it's going to be the private sector that leads this country out of the current economic times we're in," the former president said to applause from members of a local business group."You can spend your money better than the government can spend your money." Repeatedly in his hour-long speech and question-and-answer session, Mr. Bush said he would not directly criticize the new president, who has moved to take over financial institutions and several large corporations. Several times, however, he took direct aim at Obama policies as he defended his own during eight years in office. - Washington Times (ed. note. I purposely pulled this from a right-wing website that filtered the Times' story, so you could see that I'm not far off base, even if I come to different conclusions.)
Couple of points before I dive headlong into the fray here:
- It was private enterprise that got us into the mess, and (bear with me for a moment here) you take the toys out of the child's hand after he's broken it.
- Former President Who, now?
- Under the Bush administration, we went from a half-trillion dollar budget surplus to a half-trillion budget deficit (before TARP and ignoring the costs of two wars) in 2008. Bush added $5 trillion dollars to our national debt.
But I digress. Let me get to the main course.
The free markets are powerful engines that take an unlikely concept, the greatest social good can come from the self-interest of enlightened individuals, and puts it into action.
For the most part, it does a pretty good job of this. For instance, no one can argue that deregulating the airline industry kept the price of flying from coming down, although the ancillary problems cannot be ignored: more late flights, unsafer planes, all due to staffing cuts to maximize profits, as just one set of examples.
Here's the thing about free markets and what even Adam Smith, the founder of laissez-faire capitalism, warned against.
People are children, essentially. See, the key concept of capitalism is that whole "enlightened self-interest" thing, emphasis on the enlightened bit. The key to efficient markets is all information is readily available to anyone and everyone. This is the enlightenment. When you shop for a new car, generally you go out and compare different models and scout out for the best information on each, compare prices and make your decision based on that. You want the best value for your hard-earned money.
In many cases, particularly as the stakes get higher, the self-interest part kicks in. People get greedy. Knowing that full disclosure will provide for rational decision-making, manufacturers and vendors will withhold information. Whle this creates a temporary (sometimes long-term) profit ubermaximization for the seller, it is unhealthy and inefficient for the market in general.
We've seen this time and time again within the last year: banks in particular got greedy. The subprime mortgage crisis, for all the conservatives want to point fingers at the poor and at Democrats for forcing mortgages on people who didn't need them, created a monster profit for companies like Countrywide and Ditech. You can't blame that on the poor or the Democrats.
By dicing interest rates as teasers, and making current money on fees and mortgage churnings and repackagings into instruments that shed their risk without creating wealth, banks neglected to think through to an obvious conclusion: when those mortgages reset, the economy, particularly wage growth, had better have kept pace.
Under the Bush administration...well, let's just say that if you made $40,000 in 2000, it took until 2005 before you actually saw an increase in real income. If you made $400,000 in 2000, you went swimmingly along. If you made $400,000, you didn't have to worry about a subprime mortgage, tho.
So when the mortgage resets occured, people simply hadn't been able to keep their incomes apace, and they got hammered.
Justin Fox of Time Magazine has an intriguing article about how greed and free markets have worked during the last 100 years. Entitled The Myth Of The Rational Market, Fox points out that trouble occurs in the economy when people forget the lessons of the Great Depression: economics is not rational because it is based on human beings, and human beings are not rational all the time. In other words, prices (particularly of stocks), which nominally should reflect all available information and be "reasonable reflections of economic reality," don't and aren't.
Thus the concept of "irrational exuberance," credited to Alan Greenspan but in truth coined by economist Robert Shiller years earlier, is born.
This is, in part, one reason why I firmly support single-payer health coverage. 75% of the monies spent on healthcare in this country are post facto to cover preventible chronic conditions: diabetes, obesity, diseases from smoking, high blood pressure, heart disease, hypertension.
Why? Two factors: one, the free market system of healthcare is more interested in focusing on profit than on the health of the patient and thus ignores the dictum, an ounce of prevention is worth a pound of cure. Healthcare in this country is now about diseasecare. Two, also related to free markets, as insurance premiums rise and companies are forced to shop around for lower prices, the insured (e.g. employees) are put into a situation where they may have a good doctor, but are forced to give him or her up because that doctor is not listed on the insurance plan. A long term relationship with a doctor, one who knows you literally inside and out, can create a sense of rapport and a sense of, for want of a better term, ownership on the part of the patient of his own body.
Rather than be viewed as a profit center, the patient is humanized when he can see the same doctor, year in and year out. So the five minutes or so the doctor spends talking about dieting can morph into fifteen minutes or so trying to get to the underlying cause of why the person is overeating (with an appropriate referral to a diet clinic or a psychologist, if needed). Yes. Imagine. A doctor who can actually see you for fifteen minutes on top of an examination and writing out prescriptions! If he's not worried about churning his portfolio to see the most patients he can because he's already assured of a salary, a large, comfortable salary like the doctors in England, he's not going to mutter a few sentences and shove you out the door.
Ironically, conservatives mouth off about "the government choosing your doctor," and the "depersonalization into an ID number of the patient" when they whine about "socialized medicine," ignoring these very basic tenets of healthcare.
The point of this column is to keep all this in mind as you listen to the debate over healthcare, banking reform, and any number of the programs that Obama and the Democrats are going to push thru Congress.
When children break their toys, those toys need to be taken away from them.
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