Tangled

….oh the complex webs we weave when we let our government intercede…

“The propriety of stimulating by rewards the invention and introduction of useful improvements, is admitted without difficulty.  But the success of attempts in this way, must evidently depend much on the manner of conducting them.”

~ Alexander Hamilton, Report on Manufactures, 05 December 1791

______________________________________________________________________

Government has, almost from the very start, attempted to stimulate or strengthen parts of the American economy.  It’s somewhat ironic, simply because most of the Founders thought that government should stay out of the economy as a general rule.  They thought that what they engaged in at the time would be the rare exception to that rule.  The first Congresses based their interference in the logic that the country was new and needed to get itself onto firm financial grounds if it was going to be successful.  And they were mostly right, both in their belief that the government should generally not engage in active economic endeavors, and that the new nation needed it to become stable.  Of course, they were dead wrong in their belief that such intercessions would (and should) be a rarity.  Modern Congresses have certainly thrown out the idea of “less is more” when it comes to meddling in our nation’s economic affairs.  Our President has even recently announced that he wants to work with Congress to wind-down decades-old mortgage programs backed by our government, only to replace them with some other form of government guarantees!  Hamilton was unfortunately entirely accurate when he stated that the success of such interventions was highly dependent.  It is entirely too obvious that our modern policy-makers don’t give the long-term ramifications of such actions much thought.

The rise of government-sponsored enterprises in the last few decades has only too clearly demonstrated the problems inherent with mixing the public and private sectors.  For the uninitiated, a government-sponsored enterprise is a Congress-created financial services corporation.  And the two most well known of these organizations?  Freddie Mac and Fannie Mae, also known as the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association.  Though privately owned, these types of companies have public charters from the US Government, which allows them to secure favorable financial deals since there has been a belief among investors and lenders that there was an “implicit guarantee” that our government wouldn’t allow them to fail.  We’ve obviously seen the truth in that perception, as well as the issues generated by it.  One has to hope that Congress, had they for-seen the financial crises, would never have chartered these companies.  But since we don’t require anyone in Congress to actually think or plan ahead any more, that didn’t happen.  There wasn’t a financial mastermind like Alexander Hamilton contemplating both the short-term and long-term ramifications of intervention.  Nor was there a group of men as contemplative and as mostly uninterested as the Founding Fathers debating on the wisdom of such plans before enacting them.  There were simply knee-jerk reactions to economic problems or last-minute solutions to financial crises and Congressional deadlocks.  How could we have expected success when the manner in which these so-called “solutions” was so unplanned and haphazard?  And most importantly, our modern Congresses have failed to ask the question the Founders most certainly would have asked themselves before entangling themselves in our nation’s economic affairs: is such interference really necessary?  

 

Res Publica

 

Documentation without Representation:

Alexander Hamilton, Report on Manufactures, 05 December 1791 (emphasis added)

http://www.constitution.org/ah/rpt_manufactures.pdf

Electronic Text Courtesy of The Constitution Society

Leave a Comment ↓

No comments yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: