Open Letter from One Non-Economist to Another
[An MP3 audio version of this article, read by Floy Lilley, is available as a free download.]
Dear Dr. Drew Westen,
I read your commentary this morning, as many have undoubtedly done. The economy is a very interesting and pressing current affair. I realize you may receive volumes of email regarding what you have written, so I hope you will consider taking time to read what I have to share.
Although I take issue with virtually all of what you have written in your commentary, please allow me to address a specific portion of your article:
The president needs to tell the American people the story, over and over, of how we got in this mess, who put us in it and what will and won't get us out of it. Franklin Roosevelt had no trouble pinning the nation's economic difficulties on the Republicans who had fiddled with free-market extremism as the nation's economy burned, and it took 40 years and the charisma of Ronald Reagan for anyone to put voice to that ideology again.
I interpret this as your granting license to use propaganda to convince the people that free-market capitalism is to blame for the current situation, and that divisive politics should be used to make the case against the market. Is that your intention? If so, I would like to share a few pieces of information with you.
There is ample contrary historical evidence that shows that Hoover and the Republicans were actually quite a bit more involved in the affairs of the economy than supporters of the New Deal realize. Some of the best evidence I've come across is America's Great Depression by Murray N. Rothbard. If you have not had a chance to read it, I highly recommend it as a fascinating and insightful book. In this work, Rothbard shows that FDR simply extended policies put in place by Hoover — after running on a platform for decreased spending and less government interference. Can you imagine that? The Democratic candidate ran on a platform of lower taxes and smaller government in order to contrast himself to his predecessor who raised taxes and spent on many programs that were extended into what is today known as the "Roosevelt" New Deal. Rothbard systematically shows how, contrary to popular historic interpretation, artificially low interest rates and loose monetary policy of the Federal Reserve System fostered the boom of the roaring '20s. He then shows how government interference, combined with an increased burden to the taxpayers, prolonged the Depression during the New Deal era.
I once thought, just as it seems you do, that capitalism was to blame for many terrible things. But, I've begun to learn through many hours of reading essays, articles, and books, that things aren't exactly as I had come to accept them. The freedom to learn from a multitude of viewpoints — including viewpoints in opposition to the government point of view — is a great beauty and benefit of living in our (nominally) free society. It took from me only an inquisitive mind and the time to learn that many of the facts I learned in school were hardly facts at all; they were selective interpretations of history that were favorable to powerful people.
In light of this, I am issuing a request to you in the name of philosophy. Would you consider that the truth may be vastly different from what you have come to accept as fact? Would you be open-minded enough to consider the economic problem in terms of ultimate rather than proximate causation? Some individuals are more isolated than others, but generally we exist (and coexist) based on human actions and interaction. Government's role in regulating this system of human interactions has grown to enormous proportions. Because of this, we have had a system operating in America for some time now that cannot even remotely be described as free-market capitalism.
For example, we most certainly would not have the Federal Reserve System if we had free-market capitalism. We would not be at all concerned over a few hundred million dollars in bonus payouts to AIG employees. This is because AIG, in a truly free system, would have been regulated by the market straight into insolvency and bankruptcy last fall.
Instead, we have men with fine hats who decided it was morally right to take $180 billion in taxpayer funds and give it to AIG to prop it up, even as it flailed about under the weight of its own malinvestments. Amazingly, those same men with fine hats are now crying in anger and stirring up partisan rhetoric. At what cause? The "greedy capitalists" at AIG decided to give less than 0.1% of the $180 billion to their best and brightest in order to help save the sinking ship. Should not the new partial owners, the American taxpayers, be happy that AIG is trying not to lose all that bailout money? Instead, we get yelling about injustice and corporate greed, even as this was enabled by congressional vote in the first place. Talk about fiddling while the economy burns. Does this not strike you as a larger problem than simple greed at AIG?
Please try to think seriously about what I am saying with the points I've mentioned here in mind. In short, I am asking you to consider the possibility that the true problem lay with our Congress, the very people who enabled the payments by permitting the bailout to occur. Finally, consider our corrupt Federal Reserve System as the ultimate cause of our economic woes.
There exists a vast collection of essays and books dedicated to the ideals of freedom, liberty, property rights, and peaceful interactions. Most of these works will never have been seen during the course of a state-run education. (I know this, because I have gone through about as much state-run education as anyone can in one life.)
I suspect you may never have heard of people like Ludwig von Mises, his student Murray Rothbard, or many other scholars of the Austrian School of economics. The Internet is a wonderful tool, if one takes the time to use it. An open mind and curiosity are all it takes to shed some new light on the economic matters at hand. I implore you to consider that you have been misled and are mistaken. Through your commentary, you provide intellectual cover for a system and structure of power that does not deserve your support. In fact, the system itself is to blame for the economic problems you are suggesting President Obama can repair.
Matt Novak, Ph.D.