Recessions happen. The stock market rises and falls. The question ought not be about how the market is doing today, but about its net gain over the years. Investing is about long-term economic commitment, not short-term gratification.
During the slugfest that was the Democratic debate in South Carolina Monday night, Sen. Hillary Clinton proposed a “quick fix” that would damage the economy at least as badly as Richard Nixon’s wage and price controls, or efforts by the government to reverse the Great Depression, which arguably was caused in large part by government intervention in and manipulation of a free market economy.
Sen. Clinton said as president she would “have a moratorium on home foreclosures for 90 days to try to help families work it out so that they don’t lose their homes.” She would also “have an interest rate freeze for five years, because these adjustable-rate mortgages, if they keep going up, the problem will just get compounded. And we need more transparency in the market.”
Then, in a version of George McGovern’s guaranteed minimum income proposal that helped sink his 1972 presidential candidacy, Clinton said, “I think we need to give people about $650, if they qualify — which will be millions of people — to help pay their energy bills this winter.” Why not instead accept payments offered by Venezuelan President Hugo Chavez? Former Rep. Joe Kennedy regularly testifies in TV commercials to Chavez’s concern for America’s poor. Chavez is offering discounted heating oil, courtesy of Citgo, which is owned by the Venezuelan government.
In an interview with The New York Times, Sen. Clinton said as president she would inject government more into the economy and rely less on market forces. She specifically mentioned income inequality and economic excesses, such as executive-pay packages, which she termed “offensive” and “wrong.”
What is offensive and wrong is her notion that government is better than free markets at producing wealth and spurring economic growth, when just the opposite is true. The best way to reign-in “excessive” executive pay is for stockholders to do it, not the federal government. And Sen. Clinton’s proposed $650 gift to those who “qualify” is no better than the Bush administration’s proposed cash handout to everyone. That money will most likely be spent on products made in China, further enriching a nation that is pursuing policies not in America’s interests.
As Wall Street Journal editor Paul Gigot writes in an introduction to the “2008 Index of Economic Freedom: The Link Between Economic Opportunity and Prosperity” (co-produced by The Heritage Foundation), “The U.S. political debate is moving in a negative direction as ‘fairness’ and income redistribution replace growth as the policy lodestar and proposals for tax increases proliferate.”
Markets do best when government mostly leaves them alone, but Sen. Clinton, who along with her husband has made — and Bill still makes — millions off their notoriety and the selling of his presidency, are set for life, so what do they care? They can pretend to care for “the little guy” even while taking steps that harm everyone but themselves and their rich friends.
Income redistribution is socialism no matter what other label is attached to it. There is a Commandment (the Eighth) against stealing, but when government does it, it is called taxation. The results are the same. The person out of whose pocket the money comes no longer has access to what he has earned and the person (or government) that takes the money often wastes it on things of which the earner would not approve.
The economy is adjusting because of greed, mortgages people couldn’t afford and should never have been given and because adjustments are normal in a capitalistic system.
On Oct. 9, 2002, the Dow Jones Industrial Averages closed at 7,286.27. On Oct. 9, 2007 it closed at an all-time high of 14,164.53. Those who were invested in 2002 have made a lot of money. Those who buy now and stay invested will make money. Now is the time for optimism, not meddling by the federal government. What this economy needs is more freedom for the individual and less manipulation by over-taxing, over-spending and over-regulating government.