Once upon a time, this nation had a choice of political philosophies from which to choose. During his first campaign for the White House, in his acceptance speech at the Democratic convention, Franklin Delano Roosevelt promised a new direction for the country.
“What do the people of America want more than anything else? To my mind, they want two things: work, with all the moral and spiritual values that go with it; and with work, a reasonable measure of security--security for themselves and for their wives and children. Work and security--these are more than words. They are more than facts. They are the spiritual values, the true goal toward which our efforts of reconstruction should lead. These are the values that this program is intended to gain; these are the values we have failed to achieve by the leadership we now have.
“Our Republican leaders tell us economic laws--sacred, inviolable, unchangeable--cause panics which no one could prevent. But while they prate of economic laws, men and women are starving. We must lay hold of the fact that economic laws are not made by nature. They are made by human beings.. . .
“I pledge you, I pledge myself, to a new dea l for the American people. Let us all here assembled constitute ourselves prophets of a new order of competence and of courage. This is more than a political campaign; it is a call to arms. Give me your help, not to win votes alone, but to win in this crusade to restore America to its own people.”
The standard bearer for the Grand Old Party, incumbent Republican president Herbert Hoover, responded with an eloquent defense of classical liberal values.
“It is false liberalism that interprets itself into the Government operation of business. The bureaucratization of our country would poison the very roots of liberalism that is free speech, free assembly, free press, political equality and equality of opportunity. It is the road, not to more liberty, but to less liberty. Liberalism should be found not striving to spread bureaucracy, but striving to set bounds to it. True liberalism seeks freedom first in the confident belief that without freedom the pursuit of all other blessings and benefits is vain. That belief is the foundation of all American progress, political as well as economic.
“Liberalism is a force truly of the spirit, a force proceeding from the deep realization that economic freedom cannot be sacrificed if political freedom is to be preserved. Even if governmental conduct of business could give us more efficiency instead of giving us decreased efficiency, the fundamental objection to it would remain unaltered and unabated. It would destroy political equality. It would cramp and cripple mental and spiritual energies of our people. It would dry up the spirit of liberty and progress. It would extinguish equality of opportunity, and for these reasons fundamentally and primarily it must be resisted. For a hundred and fifty years liberalism has found its true spirit in the American system, not in the European systems.”
When the votes were counted, the American People had overwhelmingly chosen the vision laid out by FDR. In his first inaugural address, he elaborated:
“If I read the temper of our people correctly, we now realize as we have never realized before our interdependence on each other; that we can not merely take but we must give as well; that if we are to go forward, we must move as a trained and loyal army willing to sacrifice for the good of a common discipline, because without such discipline no progress is made, no leadership becomes effective. We are, I know, ready and willing to submit our lives and property to such discipline, because it makes possible a leadership which aims at a larger good. This I propose to offer, pledging that the larger purposes will bind upon us all as a sacred obligation with a unity of duty hitherto evoked only in time of armed strife.
“With this pledge taken, I assume unhesitatingly the leadership of this great army of our people dedicated to a disciplined attack upon our common problems.”
FDR was true to his word, and during his four terms in the White House, he laid the foundation for our modern welfare state. He confiscated Americans' gold, abrogated contracts written in terms of true value, and gave the people a paper money. He created Social Security, by which each generation would be responsible for providing a retirement income for the previous generation, not through saving and investment, but rather in the nature of a pyramid scheme. He created the Federal National Mortgage Association and the Federal Housing Administration to provide Americans with home loans. He created the Federal Deposit Insurance Corp to guarantee bank deposits.
In the decades since FDR launched the New Deal, through both Democrat and Republican administrations, government has continued to grow and social welfare programs have proliferated. Republicans have continued to profess their belief in limited government and free markets, and a significant portion of the citizenry remains wary of big government. But the fact of the matter is that the welfare state has become ensconced in our national conscience. The elderly want their Medicare and Social Security. Farmers want price supports and urban dwellers want subsidies for mass transit. The poor want welfare checks and businesses want protection from their competition. Home buyers want cheap mortgages so they can buy overpriced houses, students want subsidized loans so they can pay outrageous tuitions. Everyone wants something, and they expect the government to provide it to them, or at least a subsidy to offset its high price.
But FDR was wrong about economic laws being man-made; the laws of supply and demand are as immutable as the laws of gravity. Economic resources are by their very nature scarce, and must be rationed in one manner or another. Supply and demand must always find equality in the marketplace; if not through the mechanism of price, then by waiting in line or with government-issued ration cards. If resources are underutilized or misallocated, then economic growth will be diminished. Businesses forced to pay above-market wages will eventually go bankrupt. Most important of all, money is not wealth, and printing more of it will not create lasting prosperity.
By virtue of having led the free world to victory in WWII, as well as its military and economic might, America became the world's leading economy and its dollar the global currency. And because the dollar was the world's reserve currency, America was able to borrow almost without limit. But that temptation has proven too great to resist, and the country that was once the greatest economy and largest creditor to the world, has now become the biggest debtor and greatest spendthrift of all time. But even America does not have truly unlimited borrowing power.
What we are witnessing today is the inevitable collapse of the New Deal, and the entire edifice of the welfare state which was built upon it. George Bush had an opportunity to face this challenge based upon the principles of the party on whose ticket he ran for office. George Bush could have said that we are a nation of laws, and that he is charged with executing those laws. Every security issued by Fannie and Freddie carries a disclaimer that it is NOT guaranteed by the US Treasury, and investors earned premium returns for investing in those securities because they were taking on risk. George Bush could have dealt with Fannie and Freddie's insolvency by simply placing them in conservatorship, and allowing losses to accrue to those who put their money at risk. But no! He did none of these things. When his Chinese debt masters snapped their fingers, George Bush jumped to do their bidding.
The bailout of Fannie and Freddie will, at best, prolong the inevitable. If George Bush is lucky, the financial debacle that awaits us will occur on his successor's watch. Observing the current administration is like watching a gambling addict at the roulette table. After each spin, he doubles down, convinced that the next number will redeem his fortune. First it was the bailout of Bear Stearns, now the bailout of Fannie and Freddie, next will be the bailout of Lehman Brothers and Merrill Lynch, to be followed by the bailout of the FDIC, the bailout of the PBGC, the bailout of Detroit automakers, and the bailout of state and local governments. But who will bail out our government when there's no one left to bail?
I'm sure the Republican Party will continue to be on ballots for many elections to come. And I'm sure that its candidates will continue to profess their devotion to conservative principles. But the Republican party has become like the village whore who puts on a white dress and walks down the aisle. While the church scene may display an aura of innocence and virtue, none will be fooled into believing her a virgin, and many will chuckle as they recall the moments of pleasure they once shared with her.
The Democrats promise to expand the welfare state, and I have no doubt that they will. They promise to raise taxes, and I have no doubt that they will. They promise to cut our national defense, and I have no doubt that they will. They promise to deliver equality for every race, creed and gender, and I have no doubt that their vision will lead us to a poverty shared equally by all.
There is no promise a Republican can make to which I will any longer give credence. Their talk of conservative principles is a hollow shell in which I have completely lost faith. Their candidates are empty suits whose only goal is preservation of their political careers. I hope and pray that from somewhere, and soon, a political movement will arise that embodies the principles of liberty and freedom upon which this country was founded. But as for myself, a lifelong Republican like my parents before me, I swear to God that so long as I live, never again shall I cast my ballot for a candidate of the Grand Old Party.