“Let them fail; let everybody fail!” The great entrepreneur Henry Ford spoke these words in 1934 in the midst of the Great Depression, but we would be wise to heed them today. Ford, a man who has done much more good for mankind than any politician ever has, understood that the market must be allowed to function freely, especially in bad times. Failed businesses propped up by the state make everyone worse off as scarce capital and resources are diverted away from productive firms.
Politicians need to immediately stop trying to plan, save and stimulate the economy with their brilliant idea of spending more money. An economy is something that cannot be planned or managed; it is far too complex for any team of self-labeled economic geniuses.
The market is around us all the time but not very noticeable, much like the air we breathe. Just a look outside will amaze you: thousands of cars and trucks speeding down US-1 going to and from market transactions, people streaming in and out of stores with seemingly limitless quantities of everything, and motorists filling up at countless gas stations with fuel that was pumped out of a desert halfway around the world just weeks before.
Too many of us unfortunately take the market’s many wonders for granted, leading to incessant calls for more regulations, taxes and subsidies. We are lucky that the market still overwhelmingly directs the economy and we owe our great wealth and prosperity to markets. The poor in America live better than the kings of just centuries ago. Why would anyone interfere with this fantastic engine of growth and advancement?
The government should actually obey the Constitution and be relegated to protecting freedom and property rights – the things most necessary to free markets. Business shouldn’t be helped or hampered by the toxic hands of the state, it should be left alone.
To say that this laissez-faire system I advocate is somehow responsible for our current crisis is untrue partly because we have no such system. Under laissez-faire, only the departments of Justice, Defense, State and the Treasury would exist. Ten departments that explicitly interfere with the market, such as the departments of Commerce, Energy, Transportation and Agriculture, would be abolished. There are additionally over 100 federal agencies and commissions that would all be axed. The Federal Register contained 73,000 pages of regulations as of the end of 2007. I haven’t even mentioned state and local regulations.
This recession was caused by extensive government involvement in the housing market. Government guarantees of mortgage loans through Fannie and Freddie, 2 trillion dollars in illusory capital created by the Federal Reserve lowering reserve requirements and interest rates to near zero, and government encouragement of reducing lending standards combined with insane levels of leverage fueled the largest housing bubble in history.
We do need some dramatic changes, but not the kind being sought today. We need drastically smaller government and much more freedom. We need to let the market correct itself and remove scores of regulations and taxes to end this crisis quickly and pave the way for future sustainable growth.