Winthrop Quigley of the Albuquerque Journal claims to be a “free market fan” in his column in today’s paper. He then spends 800 words defending the various bailouts passed under both President Obama and Bush. Worse, Quigley makes no serious arguments in defense of massive government intervention. The best he can come up with is the fact that the recession supposedly ended in the middle of 2009.
To say the least, I find his arguments dubious. Kind of akin to the Aztecs sacrificing a virgin to the gods for a good harvest and believing that sacrifice to be effective when the harvest turns out well. Quigley essentially admits this at the end of his piece.
I believe that government policies have actually exacerbated the current crisis and sown the seeds for an even greater future crisis. This has been the case historically as the “too big to fail” Long Term Capital Management and the pumping up of the housing market through Fannie and Freddie are two major policies that sowed the seeds for the current crisis.
The market –even a heavily-regulated one like we have now — is more resilient than Quigley seems to believe. If the big banks, AIG, and even the automakers had failed with no bailouts, the US economy would emerge from this crisis in much better shape than before with more responsible, less corrupt companies coming in to replace those that failed. Better still, the federal government would not be burdened with trillions of dollars in debt that Bush and Obama gave us. As this article from Reason Magazine argues, the economy is getting worse, not better thanks to these federal policies. Only time will tell, but I find Quigley’s arguments unconvincing.