Not the Fault of Deregulation

There is a growing effort from those on the left to blame our current economic problems on "deregulation."

According to leading Democrats:

House Banking Committee Chairman Barney Frank: "This is the fruit of decades of 'leave the market alone, don’t regulate it. It will take care of itself' ... Clearly we’ve got to get some regulation here."

House Speaker Nancy Pelosi: "The Bush Administration’s eight long years of failed deregulation policies"

House Democratic Leader Steny Hoyer: "A stark failure of the economy and this administration’s laissez faire, take the referee off the field, let anyone do whatever they want to do and everything will be fine"


As the Heritage Foundation puts it though, "The problem with the Democrats' 'deregulation did it' meme is that it didn’t happen – deregulation that is."


Although nowhere near being a socialist "command economy", the United States economy is quite heavily regulated, and a lot of new regulations have been put into place under the Bush administration, like Sarbanes Oxley.

Which is not to say that Bush has deregulated some things, but even far-left Democratic senators like Chuck Schumer have been pro-deregulation in recent times.


Furthermore, government interference with the economy shares a large share of the blame for the mess we are in.

I've stumbled across a number of solid articles that correct the record on this dubious "deregulation caused this" claim, which I think are worth sharing:


First, an editorial titled Is Capitalism Dead? explains the (well intentioned) role the government played in ultimately bringing down the housing market. It begins:

Is this the end of American capitalism? As financial panic spread across the globe and governments scrambled to contain the damage, reality seemed to announce the doom of U.S.-style free markets and President Bush's ideology. But this is wrong in two ways. The deregulation of U.S. financial markets did not reflect only the narrow ideology of a particular party or administration. And the problem with the U.S. economy, more than lack of regulation, has been government's failure to control systemic risks that government itself helped to create. We are not witnessing a crisis of the free market but a crisis of distorted markets.

A Union-Tribute editorial expands on this, beginning with "The mismanagement of Fannie Mae and Freddie Mac is no orphan. It has many fathers, and deregulation of financial markets isn't one of them." and concluding "Appallingly, some Democrats still claim that deregulation fomented by Republicans and greedy investors caused the meltdown. Never mind that the policy of spreading homeownership around to folks who couldn't afford it will cost millions their homes and taxpayers an extra $700 billion."

Finally, I think Don Bourdeaux makes the case extremely well in a letter he sent to the Washington Times:

Your equating George W. Bush with FDR is spot-on ("Franklin Delano Bush," October 20). Both presidents recklessly increased government's role in the economy - a move that proved (in FDR's case) and will prove (in Bush's case) to do nothing but saturate the economy with such uncertainty as to frighten away entrepreneurs and investors.

But popular history will almost surely remember Bush, not as a second FDR, but as a second Herbert Hoover. The myth will be made that Bush was a staunch free-marketeer who was succeeded in the Oval Office by a charismatic saint whose hyperactive interventions saved the economy (even though precious little evidence of economic salvation will appear in the data). History will forget Bush's interventions just as it has forgotten Hoover's - as it has forgotten that Hoover signed the largest tariff hike in U.S. history; as it has forgotten that Hoover tried to create jobs by deporting hundreds of thousands of Mexicans; as it has forgotten that Hoover signed the Emergency Relief and Construction Act, the Federal Home Loan Bank Act, and created the Reconstruction Finance Corporation; as it has forgotten that, with the Revenue Act of 1932, Hoover raised the top marginal tax rate on personal incomes from 25 percent to 63 percent (in addition to raising the corporate-tax rate).

History will repeat itself, blaming capitalism for a problem caused and intensified by government interventions.

Update: Amity Shlaes responds to a critic, and expands on the forgotten history mentioned by Don Boudreaux.

For the record, Obama is no moderate

Senator Obama attempts to present himself as "post-partisan" and moderate. But he is not.

This is a candidate who has a more liberal voting record than Hillary Clinton. (Or any member of the Senate for that matter.)

Senator Obama likes to throw around the whole "McCain voted the same way as Bush 90 percent of the time" claim. I'm skeptical of the facts behind that because Presidents don't vote in the Senate ... but, if you are giving weight to the report that came to that conclusion, consider for a moment that it also shows that Senator Obama voted with fellow Democrats in the Senate 97 percent of the time.

That's voting 97% percent of the time with the party that, in it's two years of control over the Congress, has brought the approval rating of the Congress to its lowest levels in history (which stands right now around 14%).

It confuses me to no end that voters apparently want to send even more Democrats to the Congress and give Harry Reid and Nancy Pelosi a president of the same party who won't get in the way of their extreme, left-of-center, agenda.

Does the average American really believe in redistribution and "spreading the wealth around"? I really hope not.

Eric Massa

Up until I last year I lived in New York congressional district 29. Two years ago, the contest was between Republican Randy Kuhl (incumbent) and Democrat Eric Massa. This year's election reprises that contest.

In 2006, the Iraq War was "pre-surge," still making daily newspaper headlines, and deeply unpopular. Massa's campaigned tried to seize on the unpopularity of the war and ran on a "I served in the military, and I'm against the war" platform. The race was within a couple points and it took a couple days after the election to figure out exactly who won.

My favorite moment of the entire campaign was getting a voicemail message on my cell from a Massa supporter who wanted me to vote for Massa because Kuhl voted in favor of "CAFTA: The Columbian Free Trade Agreement" which would "ship our jobs to Columbia".

Not being utterly ignorant, I knew the bill was the Central America Free Trade Agreement (or, actually - the Dominican Republic – Central America Free Trade Agreement). And having a basic grasp of simple economics, such as the principle of comparative advantage, I'm also not ignorant enough to think free trade is a raw deal. For those and a number of other reasons, I voted Kuhl.

Kuhl is nothing to write home about. He resembles everything I hate about the Republican party. In a debate this past week on a local Rochester TV station, Kuhl basically refused to admit that all the pork he's brought back to the district is, in fact, pork. And, as of tonight, doing a Google search on "Kuhl" and "pork" turns up a post on my blog as the top hit (in which I take Kuhl to task for his porking).

And yet, somehow, Massa winds up being even worse than Kuhl in my book.

Let me see if I can explain using this handy diagram of Massa's campaign (click for a larger version):



At some point, Eric Massa got a hold of a picture of Randy Kuhl and President Bush smiling in the back seat of a limo together. Massa uses this image in several of his TV ads and apparently, has a giant wall sized poster of it that he takes around with him.

Apparently, he thinks the good people of NY-29 can be swayed over like a bunch of 4 year olds using the juvenile logic of "see! see! see! Bush is like soooo evil, and Kuhl is like Bush and so Kuhl is evil. Look, look! They were even in a limo together! And they're smiling!!!!!!"

Those of us that aren't 4 years old say "Wow. Two politicians of the same political party were in a car together. And, what's the big deal again?"

Massa also continues to be anti-war and anti-trade. Given our success in Iraq but the trouble in our economy, I find the anti-trade position to be the more concerning of the two. A few weeks ago I responded on YouTube to his anti-trade ad with the following that I'll quote here:

In 1930, in an attempt to help a troubled economy, the government followed the advice Eric Masssa is advocating in this ad: to move away from free trade towards protectionism.

The result was the Smoot-Hawley Tariff Act, one of the central causes of the Great Depression.

By contrast, the United States saw great economic gains from NAFTA, a policy established under President Clinton!

Our current economic issues come from HUD, Freddie, and Fannie pushing subprime loans, NOT free trade.

I'll at least give Massa the benefit that he allows comments on his videos.

Perhaps the most concerning thing about Massa though, beyond his juvenile "Bush = Kuhl" rhetoric and stance on free trade, is that in his ads he promotes himself as an "independent voice" but he'd be nothing of the sort.

Massa's campaign is being supported by groups that are left-wing (like the Democratic Congressional Campaign Committee) and far-left-wing (like the Daily Kos). These groups aren't giving Massa massive amounts of campaign cash to be "an independent voice."

They want him to be their voice and give left-wing Democrats even further control over the Congress. Or, as Daily Kos founder, Markos Moulitsas, puts it:

We have an imperative to take advantage of a historic opportunity to break the conservative movement's backs and crush their spirits. In the White House, that means getting Obama a broad popular and geographic mandate for change. In the House, that means annihilating the Republican caucus and working toward a 100-seat Democratic majority. In the Senate it means getting to a 60-seat filibuster proof majority.

Any typically Republican voters considering "going Democrat" this cycle may want to think about if they really want to see a filibuster-proof majority of Democrats in Congress under the control of Nancy "you have to rip their face off" Pelosi and Harry "this war is lost, and the surge is not accomplishing anything" Reid.

Finally, I'll leave you with a YouTube video I put together of Massa flatly lying about the Bush record on taxes. I did feel a little out of place putting together something that's an awful lot like an attack ad, but I'm so sick of hearing liberal politicians slander the "Bush tax cuts" as tax cuts that were only for the "super rich" that I thought it important to call one of them out on this:

Which Convention Has She Been Watching?

This is from yesterday. Michelle Obama, in an interview with PBS during the convention:

[Obama] is less concerned about trying to tear down his opponent and more concerned about laying out and having a real conversation about the issues that people are facing on the ground.

And I think that, you know, we get used to the red meat. And if you don't hand out the red meat, then somehow you're lacking. But politics doesn't have to just be about red meat.

Talking with friends tonight who are much more moderate than I am, they were telling me how taken back they were by how negative what they've seen of the convention has been.

There has been plenty of tear-down-McCain "red meat." The capstone of Pelosi's opening speech was her tirade that began with "Republicans say John McCain has experience. We say John McCain has the experience of being wrong" and ended with "Barack Obama is right and John McCain is wrong. Very, very wrong."

"Very very wrong"!? That's not just negative and red meat, but juvenile.

Or, there's Kathleen Sebelius's speech. I used to have a lot of respect for Sebelius. Although she's someone I disagree with strongly, I always thought she was the kind of person that would keep a debate on the issues and avoid making "low blows," but in her speech she delivered this distasteful gem:

Barack Obama has a plan to save the dream of homeownership for families who've lost their homes or fear they can never afford one—unlike John McCain, who has so many he can't keep track of them all.

I'm sure you remember a girl from Kansas who said there's no place like home. Well, in John McCain's version, there's no place like home. And a home. And home. And home.

Obama's convention: keeping it to the issues. Avoiding red meat.

With Friends Like These

From a technical/political perspective, Hillary Clinton gave a solid speech tonight. If you're a liberal who believes in the things Clinton and Obama do, and you were thinking of not voting for Obama simply because he's not Hillary Clinton, I'm sure you've now "seen the light".

With that said, it was really underhanded and distasteful for her to begin her attack on McCain with "Now, John McCain is my colleague and my friend; He has served our country with honor and courage". It's fine for you to criticize the candidate of the other party, but if you're going to rip into someone with claims that suggest he doesn't care about Americans in financial difficulty or women being discriminated against, cut the crap and avoid the niceties. Friends don't do that to friends.

Also, the whole tying McCain to Bush thing is getting really old. I'm sure millions of American will buy in to this distortion, but McCain's not Bush. He has his own record. Judge him for it and not someone else's. It's no more legitimate to claim that McCain would be four more years of Bush than it would be to say that Obama would be four years like the last two with Speaker Pelosi and Senator Reid while holding the reigns of Congress - the branch with an approval rating a full 12 points below Bush's. (Their 18% makes Bush's 30% look pretty darn good).

While I'm the tangent of Bush versus Reid/Pelosi, it's worth pointing out that the economy only got bad since they took control of Congress. For instance, here's a handy chart on gas prices:



But back on topic: Pelosi, Reid, and Bush aren't running for President. McCain and Obama are. Judge their records, plans, and promises, not those of people not running.

The most honest, the most open and the most ethical Congress in history

"The most honest, the most open and the most ethical Congress in history" is what Nancy Pelosi promised not quite 15 months ago.

And yet, here is just the latest scandal, this time with Pelosi center stage:

[Pelosi] has interceded on behalf of pharmaceutical company Amgen in an attempt to encourage expanded government purchasing of an HIV drug. Without her intervention, a change in Medicare rules was set to dramatically reduce the use of the same drug -- so her intervention meant the difference between a falling stock price and a rising stock price for Amgen. At the same time, she owns $500,000 worth of stock in Amgen, and the company employs two former senior staffers as lobbyists.

It's central to House ethics rules that a Member of Congress may not use his or her official position for personal gain. Ms. Pelosi was aware of her stake in the company. Rather than intercede on their behalf, it would have been more appropriate to divest her stake in the company. Instead, she used her office to push a policy that would fatten her wallet.

And while Pelosi was able to find time to keep her massive stock ownings profitable, the House utterly failed to find time to the keep the United States safe:

In the wake of 9/11, Americans were stunned to learn that our own intelligence officials had information on some of the hijackers even before the attacks.

Three years later, Congress created the Office of the Director of National Intelligence to prevent similar gaps in intelligence gathering. Its nonpartisan director oversees 16 agencies and advises the president and Congress on how best to detect terrorist plots.

But now, when it comes to intercepting the communications of terrorists overseas, the Democrats' leadership in the House of Representatives has decided that his advice is optional.

The consequences of inaction are real: Last Saturday, the director of national intelligence, Adm. Mike McConnell, warned Congress that we have already lost intelligence information and that "our ability to gather information concerning the intentions and planning of terrorists and other foreign intelligence targets will continue to degrade because we have lost tools provided by the Protect America Act that enable us to adjust to changing circumstances."

Following the lead of Speaker Nancy Pelosi, the leaders of the Democratic Party in the House of Representatives have prevented a vote on bipartisan improvements to the Foreign Intelligence Surveillance Act of 1978 — even though a majority in both chambers of Congress had indicated a willingness to support the updates and even though McConnell had been urging Congress to act on the revisions for nearly a year.

The House's lack of action meant that at midnight on Feb. 16, the nation's terrorist surveillance law expired. At that moment, intelligence officials who spend their days listening in on phone calls between terrorists overseas were legally barred from following new leads without first following outdated and cumbersome warrant procedures — even if neither caller is calling from within the U.S.

The consequences of inaction are real. Today, if someone in a previously unknown terror cell calls an eager new recruit in London, our agents will have to hang up the phone, apply for a warrant and hope for the best.

Shame on Nancy Pelosi. Makes you wonder if Congress's approval ratings can actually dip any lower.

What Do Pelosi, Gore, and Giuliani All Have In Common?

By Keith-Olbermann-logic, they're all two inches away from killing you, of course.

Now, I do have strong reservations about actions that would be classified as "politicizing the war on terror". Having a presidential candidate make the claim "X is a real and present threat and I would be the best choice of candidates to protect you from X" is utterly valid though (and so is challenging that person's claim!), and no, Keith Olbermann, making such claims is not paramount to saying you want to kill someone.

Light Bulbs and Liberty

Congresswoman Jane Harman is one of the few Democratic politicians whom I think actually has a reasonable grasp on U.S. foreign policy. Which is probably why Nancy Pelosi robbed her of her deserved post on the House Intelligence Committee.

Unfortunately, Harman's domestic policy seems as troubling a typical Democrat's foreign policy. She has introduced a bill that would ban the sale of traditional incandescent light bulbs.

I make generous use of fluorescent blubs myself. Not really out of environmental concerns, but rather because it makes economic sense to do so. As Harmon points out on an entry on HuffPo:

Only 10% of the power used by today's incandescent bulbs is emitted as light. A full 90% is released as heat. The typical 60 watt bulb only lasts 750-1,000 hours. Most fluorescent bulbs can last 8 to 10 times longer.

You do the math, and it makes a lot more sense to use fluorescent bulbs. But I have absolutely no interest in the government dictating the kinds of light bulbs that light bulb producers can manufacture. If people want to buy inefficient light bulbs, they should have the freedom to do so. This is the United States not The Nanny State.

You let this kind of thing slide, and you run the risk of the government over stepping its bounds elsewhere.

Like maybe some day they'll start telling restaurants they can't use certain kinds of cooking oils. Oh wait.

At least it hasn't gotten to the point of the government taking away citizens' houses, right?

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