NYT's "Rescue the Rescue" - Regulation needed.

fr: http://www.nytimes.com/2008/10/01/opinion/01friedman.html

136.
October 01, 2008 8:47 am

Link
Mr. Friedman,

The empty group-think demonstrated by consumers these past two decades has contributed to a demonizing of the notions of thrift and savings, is only rivaled by the failure of Congress to act with reasoned purpose this past week. Neither group is blameless.

By buying into a myth hitherto the purview of the truly wealthy, conspicuous consumption, the middle class not only overextended itself - but limited its chances of consolidating and paying down household debt to shield itself in the eventuality of an economic downturn. Ergo, today's middle class finds itself vulnerable to the tightening of credit in the marketplace and, in a very real sense, in peril of fading away. That being said, it does mean that today's middle class is deserving of government protection. This protection need not be founded on socialist principles, but rather upon a strong regulatory framework that will protect it from creditors as it begins its long term reorientation towards a new ethos of prudent consumption. Yes, a 'liberal' framework is needed.

Those like George Will who cling to the notion that "regulation" is akin to socialism are misguided. If a bailout is to come, let it come with regulatory safeguards. Otherwise, today's problems will persist. If no constraints are placed upon predatory creditors and Wall Street's amoral speculators the country will simply be revisited by another debacle in the years to come. Unfettered profit-seeking must be bound by rules designed not just to protect the individual, but to defend the viability of the national economy as well. Indeed, there is probably no greater threat today to US homeland security than the danger of an abject economic collapse borne of lax governance in the face of predatory market speculation.

Anyone who argues, as George Will does, that accepting regulatory reform in the final package is akin to selling one's soul to partisan Democrats intent on desecrating the principles of the founding fathers is simply wrong. Apparently, they do not understand the organic nature of American political history. Simple fact is, and has always been, that periodic increases in the size of government are often required to see the nation through; a la Roosevelt's NRA. In time, the pendulum swings back; a la G.W. Bush's tax cuts.

Today America's motto should be: Government only if necessary, but not necessarily Big Government.

As George Will admitted in today's WaPo, no matter where one stands on the regulatory question, the public still needs "protection against obliteration of the financial system". But, even more importantly, it needs this protection to come with a government guarantee that the financial system will have imposed upon it a little "protection" from itself - no matter what bill is finally passed.

— BeerBellyBuddah, Wpg., Canada