When did Conservatives become as dogmatic as Socialists?

My problem with the conservative position on health care reform is that it's all based off a misnomer - the automatic, dogmatic assumption that the unfettered free market is best for everybody.

That's simply not true - as recent history has uncompromisingly taught us.

Look at the housing market. Democrats like Barney Franks fought tooth and nail against regulation (which the Bush administration proposed, time and again) and, as a result, the market blew up into a bubble...

...and collapsed.

By this time next year, half of American mortgages will be 'underwater' - with borrowers owing more than their house will ever realistically be worth again.

[Wait - didn't Militant Ginger blame the collapse of the housing market on too much government interference before? Read this post and see if he's contradicting himself. Editorial Bear]

Unregulated, the free market is a permanent cycle of 'boom and bust,' which is is simply not an acceptable model to adopt when dealing with something as essential as a nation's health care.

That's not to argue against private industry, capitalism or the free market playing the largest part in the health care. It just can't be the only part - because if it is, what happens when the 'free market' goes wrong?

Which is does, infrequently, but catastrophically.

Take Social Security, for example. During the election, conservatives often proposed 'privatizing' Social Security, by giving people the opportunity to pay up to 75% of their mandated payroll payments into private funds rather than the Social Security itself.

(In fact, I advocated the exact same thing in March 2008.)

It was a great idea, before 'the crash.' In 2007, 401k and private retirement accounts offered considerably bigger payouts than Social Security, which was (and continues to be) heading towards bankruptcy.

But last year's devastating economic collapse wiped out some people's private savings accounts and 401ks. Mine lost something like 94% at one point - which is terrifying considering that some people were forced to cash in their private retirement funds when they'd lost 50%/60% of their value.

Imagine if they didn't have the cushion of boring, bankrupt, dependable Social Security? Imagine if they'd taken their 75% of payroll payments and put them into those private retirement fund instead? Ask THEM whether the free market worked better than government-run Social Security, when they'd watched almost half of their life savings dissolve away before their eyes.

In this instance, the free market system didn't work better.

And that's the rub, really.

While I believe the emphasis on society should always be entrepreneurship and private enterprise, it's become increasingly apparent that the free market can't be relied upon to 'always be right' - and however bad the government 'solution' to the free market weakness might be, they've usually got enough taxpayer clout to make it work.

Regular contributor Tom, for example, recently used the example of 'cash for clunkers,' suggesting it was a failure:

"Take a look at cash for clunkers. The program is 200-300% over budget, because the government overestimated demand for its services...

...and it would be further over budget if it hadn't been shut down early. Payment for the dealers, which was promised to happen in 10 days, has been overdue for weeks, causing several dealers to drop out of the program.

Now, ask yourself... are these the people you want managing your health care?"

Are you kidding? By those standards, 'cash for clunkers' was a blistering success!

It actually got people into the showrooms - and buying cars. That's why it ran out of money so quickly, because it worked!

Certainly, there are criticisms of how slowly it paid out and how bureaucratic it was, but 'cash for clunkers' still boosted sales for GM and Ford in a way that - you guessed it - the free market couldn't.

The 'free market' had led to the virtual collapse of the American car industry, whereas the much-criticized ‘cash for clunkers’ boosted sales for the first time since 2007. That means it wasn’t a failure, judging by it's impact on the car industry..

The simple fact is that the unregulated free market GETS THINGS WRONG from time to time - and, in a mixed economy, the government's there to pick up the pieces.

Now, I'm not advocating a socialist state, or expanding the powers and influence of government until they reach the same level as, say, Britain or France. One of the reasons I love living in America is because it embraces the opportunities of the free market (as well as its risks.)

But I just don't know where the conservative's dogmatic insistence that the free market is always right comes from. It's not.

If the events of the last year have taught me anything, it's that our 'mixed' economy in America is something of a blessing - and that the conservatives who believe the 'free market' is entirely infallible are simply no better than the idiots who believe in socialism or communism.

"Moderation in all things," said Benjamin Franklin. "Including moderation."

How to sort the American economy out...

I did a bloody stupid thing the other day. I was at IKEA, I hopped out of my car for a second (keys in the ignition, engine running) and the doors popped shut.

Locked out of the car WHILE the engine was running. Nightmare.

Fortunately, nobody has my succession of clapped out old cars without Automobile Association membership (triple A here, American Automobile Association) so I sat tight and waited for them to arrive.

And while I was doing so, I suddenly realised what was wrong with the American economy.

Returns.

Everybody returns stuff.

The reason it caught my attention at IKEA was because we were parked in the loading bay, so I got to watch an hour's worth of couples drive up and try to pack their newly purchased stuff in their SUVs and sedans. When they suddenly realised that the bed frame, kitchen cabinets and TARDIS sized wardrobes wouldn't fit, they wheeled them right back in and RETURNED THEM!

Yes, less that eight minutes after dolling out their credit card details, these shoppers were wheeling their crap back in and demanding a refund - all because they couldn't fit them in the back of their cars (you'd think they'd have considered that before making the trip.)

It got me thinking about returns policy and I remembered my wife's shopping philosophy - buy now, ponder later. She returns at least half of the stuff the buys - and the shops take it!

Like yesterday, we returned two crappy canvas/metal framed wardrobes we'd been using until I got so sick of looking at them I suggested we actually buy REAL furniture instead of 'making do.' So despite having opened them and used them for two months, the store gave us a full refund when we returned them three months later (a big pile of poles and canvas in a cardboard box.)

It gets even worse at Home Depot, where they'll give you store credit for stuff you return even without a receipt. Tina found a bag of stuff she vaguely remembered buying at Home Depot the other day and we returned half of it. The other half didn't 'scan' - pretty much proving that none of it was bought from Home Depot in the first place - but they still gave us credit for the rest of it!

Other stores will even give you CASH back for products you return without a store receipt... And people do so - often.

The entire retail market in America seems to have a 'churn' of (if my wife's anything to go buy) 30%. For everything that's sold, a third of it gets returned (in various stages of disarray) and then sold 'On Clearance' or written off as a deduction.

I think it would be beneficial to the American economy if they did away with this returns policy bullshit and just said: 'If it ain't broke, you're keeping it.'

Likewise, consumers should learn to only buy things if they actually want them, instead of splashing out with plastic money and changing their minds on the drive home.

I, for one, am sick and bloody tired of being ordered to return stuff we only bought a few days earlier. It drives me bonkers!

Economics even I can understand...

I've got vague memories of the Reagan (and in England, Thatcher) years.


I don't remember much - but I do remember England being swept up in the after effects of 87's Black Tuesday and millions of homeowners ending up in the dodgy financial situation of having negative equity.

They'd borrowed thousands to purchase their homes - and the sudden plummet of the housing market left them owing far more then they could ever recover even if they sold their house.

It was a pretty sticky situation and should have taught us all an important lesson.... But instead, America's teetering on the brink of a similar recession right now.

The culprit? The sub-prime mortgage industry.

In order to 'clean up' a potentially lucrative corner of the market, greedy banks like Merill Lynch and Citibank have been offering fantastic mortgage packages to slightly shaky customers. Huge loans that left the borrower struggling to make the monthly repayments.

The gamble could have paid off - but throw in plummeting house prices and sky-rocketing inflation and the 'on paper' profitability of the sub-prime market has suddenly turned into a slew of foreclosures and bankruptcies.

So instead of cleaning up on the sub-prime sector, the mortgage gambles have cleaned the banks out. Merill Lynch posted 14.1 billion dollar loses this quarter just a few days after Citibank wrote down almost $10 billion.

And the result?

Thousands of layoffs - some people speculate the after-effect of Citibank's disastrous losses could see as many as 29,000 people unemployed.

More foreign bail-outs - leaving more of America's industry in the hands of shadowy middle-eastern investors.

It's a very unhappy picture and the skyrocketing inflation and miserable financial outlook has left America on the brink of a recession - which will likely drag the entire world economy down with it.

What have we learnt?

Apparently, nothing.

I'm no economist, but I can't ignore the fact that Black Tuesday and this recent scenario came on the coattails of two terms of Republican presidency.

President Reagan was occasionally blamed (either rightly or wrongly) for contributing to 87's stock market crash through 'Reaganomics.' He turned America from the world's largest international creditor to the world's largest debtor nation, increasing the deficit to a whopping 3 trillion dollars.

President Bush turned a surplus of $86 million into a deficit of $434 million and increased America's national debt to just under $9 trillion dollars.

Wouldn't it nice to have a presidency that ran the US Government more like a responsible housewife than a sailor on shore leave? To spend only what they could afford to?

If somebody hold told the sub-prime borrowers to think seriously about their financial situation - or not been dumb enough to lend them the money in the first place - perhaps this inevitable disaster could have been avoided.

I saw it coming - and I'm not even an economist. You have to wonder what those well-paid pundits on Wall Street were thinking when they gave the thumbs up to a clearly ill-considered project like plundering the sub-prime sector.

The ripples made by the sub-prime splash are likely to effect every American - and for some time to come.

Every time a Republican candidate goes on TV and extols the wonders of 'Reaganomics,' I have to wince. The Republican party is meant to represent 'small government' and fiscal conservatism. Instead, every Republican presidency in the last 28 years has represented the complete opposite.