By Charles R. Morris
Public Affairs, 2008
According to Morris, the main culprits are the U.S. Federal Reserve’s free-money policies, the banking industry’s up-front deal financing and predatory lending practices, “re-engineered” mortgage application and approval processes, and high leveraging of credit-related hedge funds.
Morris applauds 1980s and 1990s conservatives for freeing markets and deregulating the financial industry, especially following the unsuccessful economic experiments of the 1970s that brought wage and price controls as well as mind-numbing taxes and regulatory schemes. But now, he says, “a quarter-century of Chicago school piloting has brought us . . . to a debacle on at least the scale of the one caused by the liberal crackup of the 1970s.”
Toward the end of the book, Morris tackles other current social challenges, like healthcare and social security, arguing opportunistically against an unidentified opponent. He writes that ideological battles over the government’s role in solving these challenges are futile and argues rather weakly, in my opinion that as zero government involvement is not possible, then the government should be responsible for taking the lead. His faith in government-based solutions is confirmed when he woefully concludes: “I won’t speculate on possible solutions, but they will involve an expansion of government.”
To a skeptic, Morris’ interesting early analysis ends with a tired refrain calling for vague and undefined government expansion, without any articulation of related responsibilities and accountabilities for his proposed expanded bureaucracy. Given this century’s already prolific federal government expansion and the government’s sizable role in causing the credit meltdown, a much more promising approach may be to redirect the existing bureaucracy toward controlling deficit spending, limiting the bloated money supply, and correcting the government’s chronic oversight failures.