For the last seven years, according to Congressman Jim Moran, “we have been guided by a Republican administration that believes in the simplistic notion that people that have wealth are entitled to keep it.” Actually, that “simplistic notion” has been the lynchpin of the American system of free enterprise for the past two centuries. It has served to make the United States the most bountiful, wealthy and charitable nation on earth. Yet, Moran says that system “doesn’t work in the long run.”
My fellow Americans, welcome to the long run.
The coincidence of an economic downturn and our most recent political realignment has produced calls for urgent, dramatic, decisive action. Liberal politicians like Moran are urging that we will all be better off by adopting a more punitive tax code and using the Internal Revenue Service to redistribute the wealth. Republicans and Democrats have already allied to use our tax dollars to bail out an insurance giant, mortgage companies and financial institutions that made bad loans and extended credit to borrowers who couldn’t pay. Coming soon: tax dollars to save U.S. auto-makers. Attached to all these U.S. Treasury checks: countless pages of new fine-print regulations designed to prevent future financial stupidity — or to ameliorate its consequences. But, as they say in the Marines, “you ain’t seen nothin’ yet.”
This week, here in Washington, D.C., President Bush is hosting world leaders for a global game of Monopoly — with yet-to-be-determined rules, regulations and restrictions. Billed as the Summit on Financial Markets and the World Economy, the weekend séance is being described by some participants as “Bretton Woods II.” For the benefit of those who have forgotten their high-school history lessons, the first Bretton Woods Conference — held in July 1944 in the New Hampshire town with the same name — was officially called the United Nations Monetary and Financial Conference. At the time, the United States was the world’s only economic powerhouse and the goal was to construct a functioning, sustainable international economic system in the aftermath of World War II. It almost worked. Almost.
After nearly two years of negotiations, and three weeks of formal meetings in the Mount Washington Hotel, the 735 delegates from 44 nations agreed to create the International Bank for Reconstruction and Development (IBRD), the International Monetary Fund (IMF) and to establish rules and regulations for international monetary exchanges with gold (at $35 per ounce) as a currency standard. Since then, the IBRD has morphed into the World Bank, gold is no longer the “global standard” and, thanks to costly energy imports and trade imbalances, the U.S. has become a debtor nation. Now, with the rest of the world following the U.S. into recession, leaders of the most powerful economies have descended on Washington to “fix the problem.” It’s not a happy crowd.
They call themselves the G-20: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States and the European Union. The IMF, the World Bank, the United Nations and the Financial Stability Forum are also “represented.” Former Clinton-era Secretary of State Madeleine Albright — perhaps best remembered for dancing the Macarena with North Korean dictator Kim Jung Il — will be there for the Obama-Biden transition team. Nobel Laureate Al Gore wrote in a New York Times opinion piece that “the bold steps that are needed to solve the climate crisis are exactly the same steps that ought to be taken in order to solve the economic crisis.”
Unfortunately, the “bold steps” being contemplated by some of the G-20 participants may prove to be as stifling to the U.S. economy as the solution for Mr. Gore’s “greenhouse gasses.” Among the G-20 “official representatives” are those like Brazil’s socialist President Luiz Inacio Lula da Silva — who blame the United States for the current economic downturn.
French President Nicolas Sarkozy, who claims credit for having come up with the idea for this confab, has said that there is urgent need to “regulate capitalism” and that the G-20 gathering is a “great opportunity” to “build the capitalism of the future.” Among other things, he wants to eliminate “offshore tax havens” and is pressing for the means to enforce new international “codes” against “excessive risk-taking.”
British Prime Minister Gordon Brown and others in the European Union are advocating creation of a global regulatory agency for financial oversight and “international transparency” for banking activities. He supports giving the IMF unprecedented authority for surveillance over transactions by borrowers and lenders.
Proposals like these will be very costly — and it won’t be just the expense of yet another bloated international bureaucracy. In the rush to establish “adequate regulation and oversight” over financial transactions, too many G-20 leaders are willing to sacrifice national sovereignty and personal privacy. “In the long run,” to use Mr. Moran’s words, that’s too high a price for Americans to pay.