Yes, despite all evidence to the contrary, according to our Prez and Wall Street Insiders, the answer to the current recession is to get rid of those pesky regulations that have prevented us from having full freedom of the market. The drums are beating to continue on with the Bush Free Market agenda. The Administration continues to make stealth changes via hidden and recondite regulations.
Just two weeks ago Bush was still beating the drum for the free market as our salvation:
Bush: Nation can’t abandon free market philosophies
WASHINGTON (AP) — President Bush said Saturday that despite diving stock markets and fears of global recession, now is not the time for nations to abandon open market policies or approve changes that would threaten free enterprise.
Bush used his weekly radio broadcast to address anxiety about the financial meltdown, which Federal Reserve Chairman Alan Greenspan told Congress this week had left him in a “state of shocked disbelief.”
The president, who is hosting a meeting of world economic leaders on Nov. 15 in Washington, called for patience and expressed confidence the economy would eventually rebound. He called on the leaders at the summit to recommit themselves to the fundamentals of “long-term economic growth – free markets, free enterprise and free trade.”
“And this moment of global economic uncertainty would be precisely the wrong time to reject such proven methods for creating prosperity and hope,” he said.
These market fundamentalists are truly unbelievable. Facts appear to have no impact on them. Can it be that this is just one of the most amazing examples of belief overcoming the evidence before one’s eyes?
To them, had we but privatized Social Security – or more accurately, done away with it and replaced it with only 401(k)s, all would be well. They shamelessly argue that had we only allowed the market to control everything including conducting our wars . . . wait, we already did that one. OK, had we gotten rid of every other part of government and turned it all over to the private sector, capitalism would be humming along.
But as we now know, it was the few remaining regulations that saved us. Consider those who have just retired with no defined benefit pension and depending only on savings put into 401(k)s. Now those are some people on the edge of poverty, probably deciding they had better un-retire and try to find a job, any job.
In other words it is the “socialistic” non-free market parts of our system that have saved us from sliding all the way over the cliff.
As a new report from Brookings points out:
Between October 2007 and the close of trading on October 24, 2008, stock market prices in the United States fell 43%. Newly retired workers who invested all their savings in the American stock market have seen the value of their nest eggs fall more than 40%. In contrast, the purchasing power of their Social Security benefits has been unaffected by the stock market slump.
. . .
Social Security’s long-run funding problem is one reason critics of the program argue for full or partial privatization of the program. As recently as 2005 President Bush urged Congress to adopt a reform plan that would have allowed workers to divert some of their Social Security contributions into private retirement accounts. The reform would have undermined Social Security funding over the next few decades because workers who opted into the new accounts would have sent smaller contributions to the existing system.
Had the free marketeers had their way, we would have a decimated Social Security system by now. That was the plan, something along the lines of the McCain health care plan that would have hollowed out employer-based health care and left most people with no coverage as its effects were felt.
All sorts of claims are made for the magic of the market, but a fair examination – rather than ideological one – shows these claims are simply not supported by the facts. As the Brookings report explains:
Individual account plans like the one proposed by President Bush differ from traditional Social Security in an important way. Each worker’s private retirement benefit depends solely on the size of the worker’s contributions and the success of the worker’s investment strategy. Workers who make bigger contributions and earn better returns on their savings get larger pensions than workers who contribute less and earn lower returns. In contrast, workers’ Social Security benefits depend on their average lifetime wages, their eligible dependents when they claim a pension, and the age at which a benefit is claimed. Workers who retire at the same age and with the same earnings records generally receive very similar benefits, regardless of the year in which they claim benefits or the ups and downs in financial markets.
A supposed advantage of individual retirement accounts is that they permit workers to earn a much better rate of return than they can obtain on their contributions to traditional Social Security. I have heard it claimed, for example, that workers will earn negative rates of return on their contributions to Social Security, while they can earn 7% or more on their contributions to a private retirement account. The comparison is incorrect and seriously misleading. Most workers can expect to obtain positive real returns on their contributions to Social Security. Over the next few decades only a few of them could obtain significantly higher returns if the system were partly or fully privatized.
I recommend reading the rest of the report for the details of the analysis.
Finally, when anyone claims we get nothing for our taxes, remember those retirees who at least have Social Security.
Freedom of the market loved them and left them.
Gary Burtless, Stock Market Fluctuations and Retiree Incomes: An Update.
UPDATE: Yep, today Bush is beating that drum even louder, and it has only one note.
November 13, 2008 Bush to warn of protectionism at economic summit
WASHINGTON – Setting a tone for an economic summit on his turf, President George W. Bush plans to tell world leaders that reforming financial markets alone won’t help if they abandon the free market and restrict trade.
The president plans to sell that message Thursday from the heart of Wall Street. At the venerable Federal Hall, home of the first Congress and within shouting distance of New York Stock Exchange, Bush was to frame expectations for the high-level gathering he’s hosting in Washington this weekend.