Dryftco

I’d like to present to everyone the first letter of many that I’ve penned. This letter is part of a series entitled “An American Position.” In these letters I will be highlighting an issue and subsequently detailing how we have arrived where we are today using facts. I will then present the solution favored most by the Constitution of the United States.

First, it is important to recognize that Government is not our economic “knight in shining armor.” Simply put, you cannot solve the problem with more of the problem. To resolve this crisis and prevent it from happening again, you must get to the root: overregulation by the federal government. The Community Reinvestment Act is the main proponent. The CRA gives grants to financial institutions that loaned money to individuals who had low income or bad credit. This act was passed to prevent ‘redlining’, a practice where loans were denied based on the relative wealth of a neighborhood. However, the practice of redlining originated with the Federal Housing Authority in the 1930s. We have a history of passing regulation for problems of previous government regulation. This has created a spiral downward commonly known as the “Burst of the Housing Bubble.”

Supplemental to this problem was the government pumping money into the housing system thus keeping prices artificially high. This is high-school economics: Supply and Demand. In most of the country, there was an excess of houses. As supply increased, the amount of people currently seeking a home decreased. This caused housing prices to fall. Since people had been using their houses as a vehicle for retirement, this lowered the amount of money they had to retire on.  If we still practiced laissez-faire business in this country, the free market would have solved this problem on its own: Prices would’ve gone down. As prices go down, less people would be involved in building new houses and would instead be switched over to repairing or reclaiming existing ones. As demand for housing increases again, so too would production of new houses.

On top of all of this, our government is now trying to rush a new stimulus through Congress. This package places us on a slippery slope to socialism. Redistributing wealth is comparable to a doctor telling a cancer patient that cigarette abstinence will cure them. The government is purchasing a stake in private companies which is nationalization. If our current government cannot run this country without a massive deficit, why should we trust them to run a company? The common answer would be that “We need to save jobs.” The goal of an economy is not jobs: it is production. Jobs are merely a byproduct of production. A job can be to simply “dig a hole one day and fill it the next” or whatever the equivalent may be at a desk. This type of job does nothing for our production and instead raises costs with no positive byproduct. Where is the government getting this money? Taxpayers like you and me: People who may be reeling from loss of a house and/or job.

In closing, we would do well to remember how this country got economically strong. The great innovators in our economy are entrepreneurs; not government. From Franklin to Ford we have a strong tradition of great minds innovating the way we do business and in the end, improving our quality of living. Whenever the government over-regulates it becomes more unlikely that we’ll have another great innovator in our time. If we adhere to the Constitution and the advice of the founding fathers, we can again return to a time where innovation is encouraged by the free market. Eventually, someone will invent a better product than what is currently available. This benefits the inventor, consumer, and workers. It is this spirit of Americanism that is commonly referred to the “American Dream.” You are free to rise and fall based on your own merits.