Righteous column in National Review Online from Phil Kerpen of Americans for Prosperity, “From Panic to Depression?”
Blame for today’s financial panic can be assigned to a Federal Reserve that kept interest rates too low while a bubble inflated; unscrupulous lenders; people who bought homes they couldn’t afford; Wall Street wizards who overleveraged and wrote derivatives they couldn’t pay; and a Congress that set the policy goal of universal home ownership and recklessly grew Fannie Mae and Freddie Mac to pursue that goal.
But with so many real culprits out there, we cannot afford to blame the fake culprits of free trade, low taxes, and flexible labor markets. These are the fundamentals of a free economy. If we undermine them in response to the panic, we risk repeating the mistakes that followed another great panic and ushered in the Great Depression.
We tend to think that at least on the trade issue that we really have learned from history, that is, the errors made as panic turned to crisis turned to Great Depression from 1929 to 34. The Smoot-Hawley legislation to raise tariffs was such an unambiguous (Republican) failure, inviting retaliation and shutting down global trade, that no one would dare recreate it by backing out of NAFTA or raising protectionist barriers while the rest of the world expanded trade, right?
But then we see how organized labor has pulled out all the stops — pulled out all the money from the wallets of their members — to promote candidates for opposing trade and have to conclude the possibility that history repeats the old conceits, the glib replies, the same defeats.
On a related topic, from today’s Wall Street Journal op-ed page, “Labor Unions Prolonged the Depression.” A new Wagner Act could be on the horizon, writes Mark Mix, president of the National Right to Work Committee.
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