Love That Economic Pain!

What would you think if you heard a prominent physician being interviewed and the topic of discussion was the breakout of a serious epidemic, and then the physician started enthusing about how great this plague would be for his business? At the very least, you would regard such remarks as tactless and inappropriate. More likely, you would be repulsed by the lack of compassion, the gross selfishness, the ruthlessness of such an attitude.

What if you then discovered that the physician was part of a medical cabal that had unleashed the plague on the public? Would you not want, at the very least, to see them banned from the practice of medicine, and perhaps punished for having inflicted such cruel and unnecessary suffering upon so many innocent victims?

This ugly scenario is analogous to our political situation today. Leading Democrat politicians openly gush about how the current economic pain has opened the door of opportunity for them to expand the powers of the federal government. They openly celebrate what they perceive as a once-in-a-lifetime opportunity to enact sweeping new legislation, create new government programs, and assert ever-greater economic control over the American people.

Shortly after being appointed chief of staff to President-elect Obama, Rahm Emanuel told a conference of corporate CEOs how the new administration views today’s wrenching economic crisis: “This crisis provides the opportunity for us to do things that you could not do before.”

“You never want a serious crisis to go to waste,” Mr. Emanuel declared with amazing candor.

This likewise reflects the view of Emanuel’s boss. Obama himself recently stated, “This painful crisis also provides us with an opportunity to transform our economy.”

The Democratic majority in Congress apparently shares the administration’s view of the crisis. On Dec. 4, House Financial Services Chairman and a principal Democratic spokesman, Rep. Barney Frank (D-Mass.), enthusiastically predicted that 2009 would be the “best year” for new public policies since Franklin Roosevelt’s New Deal.

Mr. Frank’s statement is rich with irony. One irony is that he is one of the main culprits in having blocked Republican attempts to reform Fannie Mae and Freddie Mac several years ago. The result was this year’s catastrophic bankruptcy of the two mortgage-lending giants, which was one of the key events that helped to plunge the country into its current economic woes. Barack Obama said in October that there would be time after the election to identify and punish those responsible for contributing to the country’s financial woes, but instead of being punished for his malfeasance, Barney Frank is being rewarded with a lead role in reshaping economic policy.

There is a second irony in Mr. Frank’s gushing adoration of the New Deal. If 2009 is to be the “best year” for public policy since the New Deal, it suggests that Mr. Frank celebrates both the current economic pain and the economic devastation of the Great Depression as being exactly what “the doctor” (i.e., Mr. Frank and his ideological soul mates on Capitol Hill) ordered—lots of pain for lots of Americans, so that Frank and Company can initiate some radical public-policy surgery.

A further inference to be drawn from Frank’s statement is that he views the New Deal as the high-water mark for good legislation in our country. Apparently, Frank does not regard the growth-stimulating tax cuts under Presidents Kennedy, Reagan, and George W. Bush as being as helpful to the American people as the New Deal. The tax cuts unleashed and led to vibrant growth in the private sector; the New Deal, by continually siphoning materials, labor, and capital from the private sector to the public sector, crippled economic activity and consequently imposed great economic hardship on Americans. Clearly, Frank favors legislation that enlarges the public sector over legislation that helps the private sector to thrive.

One of the many striking similarities between today’s crisis and the Great Depression is that Democratic spin-masters are engaged in an all-out propaganda campaign to blame the 2008 financial panic on market behavior rather than on the government intervention that actually caused it. They are borrowing a page from the long-time strategy of New Deal apologists, who fallaciously attribute the Great Depression to “market failure,” rather on the radical government intervention that disrupted and suppressed the ability of markets to function.

What needs to be widely understood by Americans is this: If those in power have the same dislike for markets and the same exaggerated faith in government that FDR had, and if the New Deal is to be the model for legislation in 2009, then we shouldn’t be surprised if we end up with similarly painful economic conditions.

“We the people” are seeking cures from economic doctors with a well-known history of malpractice. Heaven help us survive whatever remedies they may concoct.