Once upon a time, someone asked Winston Churchill what he believed about government welfare. This was, of course, at a time when most of the world’s nattering classes believed that socialism and the welfare state were not only the best possible idea, but in fact inevitable.<\/p>\n
Churchill, a conservative, responded “I propose not to level out the peaks to fill in the valleys, but to put a net over the abyss”.<\/p>\n
That, for me, has always been one of the tenets of being “center-right”, as opposed to a paleoconservative; government has <\/em>a place – in the few places were the free markets don’t have a presence.<\/p>\n As re the current economic crisis? I’m not nearly smart enough to be an economist.<\/p>\n King Banaian is <\/em>smart enough – so much so that he is <\/em>in fact an economist. And a conservative.<\/p>\n And a proponent of some <\/em>kind of bailout:<\/p>\n The free market has taken an enormous amount of abuse as regards the current financial crisis. It shouldn\u2019t; it had nothing to do with it, as many of the other authors in this series have pointed out (and will). To the extent that the market has failed, it has done so largely because of government coercion over the years.<\/p>\n The \u201cfree market\u201d did not get us into this mess, but we need the free market to get us out. For that to happen, the free market needs government as a partner, whether conservatives like that idea or not.<\/p><\/blockquote>\n But the free market solves everything,right?<\/p>\n Well, yeah – as long as there is <\/em>a market. As King points out, this is not <\/em>like the Great Depression, or any of the depressions before it; those were liquidity <\/em>crises. This is a credit crisis; the engine of recovery, in our economy, is credit. And much of our credit market is based on assets – crummy mortgages, exotic derivatives based on other numbers – that may or may not have any value.<\/p>\n And without a market for credit? No recovery.<\/p>\n King:<\/p>\n Free markets do not mean always private markets. Free markets mean markets with an absence of coercion. It is possible for government to step forward for a missing market and not be coercive. A bailout that did not consume taxpayer dollars would be one example. Forcing banks to alter their lending standards would be coercive and unfree.<\/p>\n The problem we face is the absence of a market. Government can help create a free market where none exists today, and that would be a good thing. It may be that we cannot avoid costs associated with previous government meddling in the market that helped create this crisis, but we can all hope that the costs will not extend beyond those already sunk.<\/p><\/blockquote>\n Which is not to say that any government intervention doesn’t need to be watched closely to prevent it becoming the pork-fest the House Democrats tried to inflict on the nation last week. Government may need to act; it doesn’t need to be stupid.<\/p>\n Read King’s entire article<\/a> – and the Center of the American Experiment series<\/a> of which it’s a part.<\/p>\n UPDATE:\u00a0 Government doesn’t need to be stupid.\u00a0 But it seems to come naturally, as Kevin Ecker notes.\u00a0 Kevin – every bit as paleo as i am – is willing to be convinced.<\/p>\n But…:<\/p>\n