Europe’s Answer to the Financial Crisis?: Bigger Government
Ted Bromund /
Right now, the world has too little capital, too few jobs, and too little growth. So what do Europe’s leaders want to do? Press for yet more job-killing regulation and more investment-stifling oversight, with a heaping helping of “global governance” on top. If this wasn’t so dangerous, it would be laughably irrelevant.
The European plans, unveiled on Sunday in the run-up to the G20 summit in April, are breathtaking in their intrusiveness. All financial market activities around the world should be regulated to ensure that they foster “sustainable economic activity,” promote economic ‘balance,’ and do not upset market stability. All tax havens must be abolished, and the way must be cleared for the “establishment of a global governance structure” that will prevent the development of all market “excess.”
This is, frankly, ridiculous. The idea that government can ensure the stability of markets is wrong, but it is hardly new. For years, we’ve been told that the U.S. showed the unacceptable, unregulated face of capitalism, while in Europe, governments ensured that markets worked responsibly. But that’s not how it’s worked out. In both the U.S. and Europe, governments have made things worse.
In the U.S., it was the collapse of the mortgage market that triggered the landslide. That market was pushed to unsustainable heights by the Federal Reserve, the Federal Housing Administration, Fannie Mae, and Freddie Mac, government entities all. The money that poured into the housing sector was created by the state, and directed into that sector as an act of policy. And where the government led, U.S. banks happily followed. (more…)