As I was perusing the business press this morning, an
article caught my eye: “That would make
a great post!” I thought to myself. I
continued reading through the rest of the articles, intending to go back to the
one that piqued my interest to compose a comment. Of course, when I went back, I could not find it!
But in the process of looking for that particular paragraph,
I noticed something troubling. Something that, should my students’ papers
include the same, would bring their score down by a full letter grade, if not more.
That troubling observation can be summed up in two
words: internal inconsistency. My students and I don’t agree on everything,
and don’t have to. They can take any
point of view in their written assignments in my class, but their views must be
well-articulated, free of factual error and, perhaps most important of all,
internally consistent.
The internal inconsistency of the policies coming out of
Washington discussed in the news gave me a bit of a headache. While one article
stressed the problems with winding down the massive mortgage-related asset
accumulation at the Federal Reserve, another discussed the Treasury
Department’s efforts to push banks and other mortgage companies to provide more
relief to troubled homeowners. While one
article concluded that all executive compensation bonuses should be outlawed,
another discussed how President Obama was reaching out to those very chief
executives for advice on how to save jobs.
The Federal Reserve strives to ease credit while paying banks to hold onto their excess reserves rather than lend them out. The business section contains a half a dozen
articles on programs and legislation – from health care to cap and trade --
that will increase taxes, and one or two articles on how businesses are having
to cut back, convert full-time employees to part-time contract workers with no
benefits, just to survive.
We need leaders in Washington who can step back and survey
the whole of the landscape, who can see that the policies being promoted by
Obama’s left hand are slapping up against those being waved about by his
right. 
We shouldn’t be spending money
to rescue bad mortgages when the policies of the government created those bad
mortgages in the first place. We
shouldn’t be punishing private business executives while pretending to ask them
for advice that the White House had absolutely no intention of following in the
first place. We shouldn’t be raising taxes and the other costs of doing business when we need private industry to keep
our labor force gainfully employed.
In fact, full employment is the key. Focusing all policy, all efforts, all
spending, on allowing free enterprise to do what it does best – hire labor and
capital to produce goods and services that private consumers want and need -- is
the solution to the problem.
For example, gainfully employed people who go to their local
bank to get a mortgage will be assessed on their true credit-worthiness without
some Treasury Department official breathing down the next of the lending
officer and telling them they have to extend credit for the greater good. With full employment, foreclosures fall to
normal levels. Mortgage-backed
securities are priced correctly. There
are no toxic assets for the Federal Reserve, in cahoots with the
creative-accounting-extraordinaires at the Treasury Department, to pile onto
their balance sheet. And the Fed would not now be undergoing experimental
reverse-repos (WSJ20091130)
to try to unwind the massive increase in assets (from $800 billion to $2.5
trillion by the time it’s over) without further upsetting the credit markets,
fueling fears of latent inflation, and undermining the strength of the
dollar.
Ah, the internal inconsistency— better yet, the ETERNAL
inconsistency -- between business and politics.
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