How free enterprise can fix the economy
September 26, 2008| By David Talbot
As presidential candidates call for a "bipartisan" effort to rescue the economy and as Congress debates a deal on a $700 billion bailout for Wall Street, Heritage Foundation President Ed Feulner reminds us that free enterprise, not ever-bigger government, is the real long-term solution.
"As a rule, Congress is good at two things: (1) Doing nothing at all. (2) Overreacting," Feulner writes in the Washington Times.
The government already intervenes heavily in the economy, he explains, and every step toward free enterprise is a step in the right direction. In fact, "Washington could encourage growth on the Street just by getting out of the way."
"The long-term answer isn't more federal control, it's a return to free-market principles," Feulner argues. The bailout needs to be small—both to minimize taxpayer liability and to ensure company managers and stockholders "suffer the consequences of their bad investments."
Furthermore, the bailout legislation should not be "loaded up with goodies for special interests" like a bailout for homeowners who made bad investments. "It shouldn't be a federal concern whether or not someone owns a home."
Congress should repeal the heavy-handed regulation they passed after the Enron scandal, Feulner continues. These counterproductive rules not only failed to prevent the current crisis, but they continue to drive investors overseas just when the economy needs them most.
Feulner also encourages businesses to voluntarily change the way they pay their managers to reward long-term performance instead of risky deals that prop up the bottom line in the short run. "This, of course, should be done by management, not by federal regulation," explained Feulner.
Meanwhile, Heritage's Conn Carroll reports that the left continues to play political games with the bailout, insisting on support from conservatives while "pushing for expanded government power to rewrite mortgage contracts and diverting taxpayer revenue from the sale of distressed assets into a housing slush fund."
