What if . . .?

by John Mark Reynolds [author, academic]

The debate Tuesday night was a draw.

I agree with McCain more on the issues, so I thought he won on points, but my bias probably accounts for much of this. However, and maybe I was the only one, tonight for the first time, I became afraid of what both politicians, but especially Senator Obama, are proposing in the middle of this serious economic time. Much of it sounded exactly like the sort of thing one reads from the early 1930’s . . . and in a bad way.

I begin to ask myself some “what if” questions . . . and to worry about the economic future. I am pretty sanguine by nature, so that was new to me.

Let me trace my thoughts as worry began to grow in me as both candidates spoke of regulation, as one candidate whacked on the “rich” and also found new rights that the government should guarantee, and as the other spoke of saving my mortgage.

I don’t know what caused this economic crisis, but my strong belief is that it was not caused by our tiny government.

One thing that makes no sense to me is the idea (from both candidates) that lack of regulation killed the economy.

If this is true, then why is Europe sliding into ruin? Surely the EU is not under regulated!

Isn’t there a case to be made that government interference in the economy (in encouraging home ownership, for example) helped create the mess? Why does anyone believe that politicians as regulators suddenly will prove less corruptible next year than they have been since time began?

Don’t tell me that rules and policies will make saints of sinners. I am no extreme libertarian. I think some rules and regulations are helpful as sign posts to right behavior . . . but if our leadership class (on Wall Street and Washington) has become corrupt, then what group will we count on to enforce the laws?

The greedy and corrupt were breaking regulations that we have now. How would more have helped?

Most of my life I believed four things about the economy . . . learned so long ago that it is hard for me to imagine that they are wrong.

What are they?

First, raising taxes in a recession will deepen it.

Second, putting any kind of burden on business in a recession, whether regulation or taxes, will deepen it. Real jobs are created in the private sector and the private sector can only take so much.

Third, protectionism will deepen an economic downturn.

Fourth, public works projects may make Americans feel good, but will not end a recession or (heaven forbid!) a depression.

In reading about the era of the Great Depression and in many talks with older folk who lived through it, these lessons were drilled into me. Did anything done by the Roosevelt administration end the Depression?

I am, however, no expert on any of this.

I am trying to be open minded, but the thought that next year we might raise taxes on some businesses and the “wealthy” (who will, trust me, figure out a way to move their money to safer havens) and move away from free trade terrifies me.

What if we begin to pull back from NAFTA and kill other free trade deals next year?

What if next year we create another government entitlement (health care) when the other entitlements are widely acknowledged to be broken?

What if we raise taxes on business next year? What if we increase regulation?

What if we engage in public works programs next year?

Isn’t the result going to be massive inflation as we take on all those obligations and are forced to pay for them by devaluing the currency? Or will free market economic activity slow down enough to lead to the worst of evils: deflation?

But perhaps I am wrong. I am no economist. Perhaps.

But what if . . .

My hope is that my continued reading will show what I have missed . . . or that if these “ancient lessons” are true, Americans (of both parties) will pull back from what seems to me to be an extremely dangerous path.

I have never hoped so much that I was wrong. ExileStreet

copyright 2008 John Mark Reynolds

John Mark Reynolds is the founder and director of the Torrey Honors Institute and Associate Professor of Philosophy at Biola University.His personal website can be found at www.johnmarkreynolds.com and his blog can be found at http://scriptoriumdaily.com.

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