Building on my post yesterday, I want to stress that my vision of economic liberty is aimed at individuals and families. I think if we had this framework for thinking about economic matters, the financial bailouts of the last year or so might have looked completely different.
We’ve spent a great deal of money and energy saving financial and automotive firms from failure. In a sense, the thought was that we can only help individuals and families in the economy by making sure that critical companies remained intact. We’ve developed a system – or at least a way of thinking about the economy – in which we can only help people by helping out firms.
What if we instead had made sure that the people that were part of those firms had what they needed in the economic downturn and allowed the firms, which are really just particular groupings of people, to go out of business? We could have spent trillions of dollars helping people get new skills in college, developed and funded programs that would have a genuine impact on the housing crisis, provided people with funding to move to the places where there are jobs and away from depressed areas, etc. These kind of initiatives, combined with some of the so-called automatic stabilizers like unemployment and welfare benefits, could have led to a bottom-up recovery, instead of a top-down one like is trying to be fostered now. And, of course, universal health care insurance is key in all of this, because more people might be tempted to move to new jobs, try new things, and ultimately be more productive if they knew they wouldn’t lose their health care coverage and could get proper care in the first place.
As for our current firm-centered approach, in the case of the financial sector, this appears to have been only choice in the short-term. (Sadly, the Obama administration seems committed to continuing keeping some firms too big to fail, instead of whittling them down to size.) In the cases of the U.S. automakers, I think this was much less true.
Either way, it would be great if we could come out of this current economic crisis with a different approach to our economy – one centered on true economic liberty for individuals and families.