Saturday, October 4, 2008

VP Debate: Winner ?? Loser: Wealth Creation

BIDEN: Wall Street run wild… make sure that CEOs don't benefit from this… Deregulation… that's why we got into so much trouble… We don't call that redistribution. We call that fairness…, I agree with the governor. She imposed a windfall profits tax up there in Alaska. That's what Barack Obama and I want to do… The wealthy have done very well. Corporate America has been rewarded. It's time we change it.

PALIN: Darn right it was the predator lenders…There was deception there, and there was greed and there is corruption on Wall Street … pushing for even harder and tougher regulations. Look at the tobacco industry. Look at campaign finance reform.… And those huge tax breaks aren't coming to the big multinational corporations anymore …I had to take on those oil companies and tell them, "No," … the greed there that has been kind of instrumental … put government back on the side of the American people, stop the greed and corruption on Wall Street… made aware now to Americans about the corruption and the greed on Wall Street …

The error? A lack of understanding of the role of the entrepreneur and the capitalist in wealth creation. The middle class and the workforce are crucial elements of a health economy, but so are the risk-takers, the investors, the capitalists, in other words, the current favorite villains of our presidential and vice-presidential candidates: Wall Street and Big Oil. Without “windfall” profits, innovation, progress and wealth creation are severely hampered. Funny how no one seems concerned over “windfall” losses.

The omission? While everyone is busy blaming the greed of Wall Street, little is being said about the role of government policies in creating the current economic down-turn. The wisest statement of the debate may have been Biden’s when he said, “If you don't understand what the cause is, it's virtually impossible to come up with a solution.” Without addressing the major role of government policies in causing the current melt-down-- the easy money policy of the Fed, the forcing of banks by the CRA into making high-risk loans, the role of Fannie and Freddie in creating a housing bubble—the “solutions” will continue those mistakes, setting us up for further crises in the future.

For criminals, ignorance of the law is no excuse. For our politicians, ignorance of economics can not be an excuse either.



Anonymous said...

You've got a lot of great points but there is one I'm not sure I agree on - I think the government has been concerned about "windfall losses" which is why they just passed the $700 billion bailout.

That said, I think you are exactly right to point the finger at Big Government. In one sense, you can think of the bailout as the government trying to fix the problems it created in the first place.

I'd sure love to see some of the politicians held accountable for their role... I think I'd start with Barney Frank who spent so much time defending Fannie Mae and Freddie Mac from being regulated.

Yes, I know Obama has set some kind of record for the amount of money he received from Fannie Mae and Freddie Mac in the short time he's been a senator. But Frank held a lot more real power as Chairman of the House Financial Services Committee.

- cfc

P.S. Thanks for enabling anonymous comments!

Anonymous said...

As usual, Thomas Sowell says it better than I did:

Do Facts Matter?

- cfc

Beth said...

Hi Chris,
Welcome to the discussion. I am not sure it is the windfall losses which they are concerned about so much as the fact that the size and number of them are too big for them to ignore. Also, the effects are going fall beyond Wall Street and Big Oil. Current Politian are all to willing to siphon off the profits of even a single success. I they could stabilize the economy without saving an investment bank, I think they would have done it

P.S. Sowell is definitely a hard act to follow!!

Beth said...

An new article which is interesting:
Why McCain Goes Easy on Fannie and the CRA. by James Pethokoukis