The late Senator Daniel Patrick Moynihan was fond of the well-known quote: We are all entitled to our own opinions, but not to our own facts. This comes to mind in trying to figure out the kind of government economic policies that might stabilize the financial system, create jobs, encourage investment, and reduce deficits.
Right now we have federal loans to prevent domino-like collapses of large investment banks, job-creation pump-priming, and rising deficits. Significant numbers of people object to the bail-out of the banks, but do not seem to care if the complex financial structure collapses. Too bad for the greed-guys. They should get what’s coming to them. What about a financial collapse that causes a long-term deep depression? The protesters seem to think that will not happen. Every economic expert we have heard from disagrees. The facts are that these policies were adopted well before the last election.
“Do something about jobs,” the protesters say, “but don’t increase the federal deficit.” No one has offered facts or theories on how to do that. Corporations are unwilling to invest their own money in creating new jobs. They are waiting for the economy to improve, that is for people to go back to work and buy things. So, as in past recessions and depressions, the government pays construction companies to build bridges and necessary public works and those companies hire people. Those people buy things with their wages and other people get hired. But, guess what, the deficit goes up. This is an unavoidable fact.
“Balance the budget; cut spending”, many demand. Even those of us who are not economists accept the principle that cutting spending and balancing the budget in times of recession is guaranteed to make things worse. The facts are that we cannot balance the budget, let the banks collapse, refuse to invest in job creation, and have a healthy economy. If these facts are wrong, where are the facts that disprove them? No one in either political party has produced a comprehensive alternative economic plan and the facts to back it up.
Simply waving signs accusing the president of being a socialist, or clamoring for dismantling the national government, or claiming our present predicament began after the last election neglects common sense, history, standard economic policies long pursued by both parties, and the facts.
The real question is whether we will all learn enough from this avoidable experience to adopt polices to prevent it from happening again, particularly sane financial regulatory policies to prevent fraud and abuse in the private financial sector. These facts we should all agree on.