Obama Evades Government’s Role in the Crisis

Washington, D.C., April 10, 2009--In an op-ed published this week by Canada’s Financial Post, Alex Epstein, analyst at the Ayn Rand Center for Individual Rights, argued that “In calling for a massive increase in government control over the economy,” Obama “has evaded the mountain of evidence implicating the government.”
 
The primary cause of the current crisis, explained Mr. Epstein, was “drastic attempts by the government to control the housing and financial markets--via a Federal Reserve that cut interest rates to all-time lows, and via a gigantic increase in Fannie Mae and Freddie Mac’s size and influence.” Through these entities, Epstein pointed out, “the government sought to ‘stimulate the economy’ and promote homeownership by artificially extending cheap credit to home-buyers.”
 
But, Mr. Epstein noted, Obama did not mention the Fed, Fannie, or Freddie even once, during his recent 52-minute speech to Congress. “Not once did he suggest that government manipulation of markets could have any possible role in the present crisis. He just went full steam ahead and called for more spending, more intervention, and more government housing programs as the solution.”
 
But the “fundamental solution to our problems,” said Epstein, is “to disentangle the government from the markets to prevent future manipulation.” To achieve that, Epstein concluded, we need to consider “pro-free-market remedies such as letting banks foreclose, letting prices reach market levels, letting bad banks fail, dismantling Fannie and Freddie, ending bailout promises, and getting rid of the Fed’s power to manipulate interest rates.”

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Alex Epstein was a writer and a fellow on staff at ARI between 2004 and 2011.