Which brings us back to the current subprime mortgage crisis. When we strip away all the complexity, we discover that social planning largely led to this debacle. Government politicians and bureaucrats forced lending institutions to make un-creditworthy loans and helped create unnatural demand in the housing market by priming the pump on bad loans. This created an unnatural price bubble in real estate, which was securing these ill-advised loans. When the bubble inevitably burst, the mortgages secured by the artificially inflated real estate plummeted in value, which left us with an epidemic of grossly under-secured loans.
Now the stability of our entire financial system is said to be at risk. It's so bad that even conservatives are considering supporting an unprecedented plan approaching a trillion dollars to "bail out" the financial industry -- not as a sop to Wall Street or corporate fat cats, but to prevent a cascading effect that some financial gurus believe could lead to a depression.
I don't pretend to have enough information or expertise to know whether the Bush-Paulson bailout proposal, or some iteration of it, is necessary to avert a horrifying financial meltdown, but apparently, many experts, including conservative ones, do.
None of this would be half as troubling to me if I believed both political parties would address it in good faith. While conservatives are highly suspicious and justifiably ambivalent about the magnitude of the proposed governmental solution, I'm confident they'll approach it with the best interests of the nation in mind.
I wish I had similar confidence in liberal Democrats, who, if past practice is any indication, would rather blame this crisis on Bush and Republicans than help to solve it. Remember Clinton's infamous government shutdown that he successfully blamed on Newt Gingrich?
But if they do cooperate, it will be at the prohibitive price of even more government intermeddling. They've already said they want to subsidize -- rather than demand accountability from -- homeowners for their irresponsible loans. They want to demonize and scapegoat capitalism and Wall Street, which didn't cause this crisis, with further regulations.
One major lesson from this the affirmation of the market principle that government does not create prosperity -- only temporary bubbles that must go pop.
Wouldn't it be a refreshing surprise if liberals, who created this monster of a financial mess by their incorrigible commitment to the magic of government, would participate in good faith -- instead of partisan exploitation -- to find a solution?
Don't bank the farm on it.