Commentary Magazine


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Commentary of the Day

J.E. Dyer, on Gordon G. Chang:

How we both do depends on what we do at home. Neither of us has the power to bail the other out — although we do have the power to injure each other. A very common human situation, and one we never seem to learn from for the next time.

America’s economic power is, and has always been, in the freedom of enterprise in our people. We can weaken ourselves by keeping the people’s capital — savings, investment, home equity — in a value-flux. The more government tries to impose an arbitrary value on our collective assets, the worse that situation will get. We can weaken ourselves by preventing the people from accumulating capital. Very easy to do: increase government expenditures. Whether you pay for that with increased taxes or with inflation, either way you prevent the people from accumulating capital, and using it.

If we do ourselves in, with policies that discourage capital formation, we will be doing it to ourselves. It’s what we did under FDR in the 1930s. China doesn’t have our economic options — by the choice of her leaders. If she doesn’t unleash the people, in an honest manner, and with government protection of individual rights to capital and property, she will continue to be unsalvageable EXCEPT by the increased consumption of other nations’ peoples.

Some day, we’re going to look back on 2008 and 2009, and wonder why it seemed so almighty important to prevent a few finance firms from going bankrupt. Fifty years from now, we will either still be paying for that decision, or will be in an unrecognizable political landscape, after the political effort to “make” overleveraged firms be worth more than they really were brought down our constitutional, rule-of-law heritage.