Most of the great problems we face are caused by politicians
creating solutions to problems they created in the first place.
Politicians and much of the public lose sight of the unavoidable fact
that for every created benefit, there's also a created cost or, as
Nobel Laureate Milton Friedman said, "There's no free lunch."
person who receives the benefit might not pay or even be aware of the
cost, but as sure as night follows day a cost is borne by someone.
Let's look at a couple of congressionally created problems.
Community Reinvestment Act of 1977, whose provisions were strengthened
during the Clinton and Bush administrations, is a federal law that
mandates or intimidates lenders to offer credit throughout their entire
market and discourages them from restricting their credit services to
high-income markets, a practice known as redlining.
Community Reinvestment Act encouraged banks and thrifts to make
so-called "no doc" and "liar" loans to customers who had no realistic
ability to repay them. A decade of monetary expansion by the Federal
Reserve Bank, contributing to the housing bubble, encouraged lending
institutions to take risks they otherwise would not have taken.
Government actions created the subprime crisis and now
government-proposed "solutions" — such as foreclosure holidays,
bailouts and further regulation of financial institutions — to the
problems they created will in turn create more problems.
doing the bidding of environmental extremists, created our energy
supply problem. Oil and gas exploration in a tiny portion of the
coastal plain of Alaska's Arctic National Wildlife Refuge would,
according to a 2002 U.S. Geological Survey's estimate, increase our
proven domestic oil reserves by about 50 percent.
and Atlantic Oceans and eastern Gulf of Mexico offshore areas have
enormous reserves of oil and natural gas. Congress has also placed
these energy sources of oil off-limits. Because of onerous regulations,
it has been 30-plus years since a new refinery has been built. Similar
regulations also explain why the U.S. nuclear energy production is a
fraction of what it might be.
Congress' solution to our
energy supply problems is not to relax supply restrictions but to enact
the Energy Independence and Security Act of 2007 that mandates that oil
companies mix more ethanol with their gasoline. Anyone with an ounce of
brains would have realized that diverting crops from food to fuel use
would raise the prices of a host of corn-related foods, such as
corn-fed meat and dairy products.
Wheat and soybeans prices
have also risen as a result of fewer acres being planted in favor of
corn. A Purdue University study found the ethanol program has cost
consumers $15 billion in higher food costs in 2007 and that it will be
considerably higher in 2008.
Higher food prices, as a result of the biofuels industry, have not
only affected the U.S. consumer but have had international consequences
as seen in food riots in Egypt, Haiti, Yemen, Bangladesh and elsewhere.
the congressional response? On May 1, Sen. Charles Schumer, New York
Democrat and chairman of the Joint Economic Committee, convened a
hearing on rising food prices saying, "The anxiety felt over higher
food prices is going to be just as widespread, and will equal or
surpass, the anger and frustrations so many Americans have about higher
gas prices." Congress' proposed "solutions" to the energy and food mess
it created include a windfall profits tax on oil companies, a gasoline
tax holiday for the summer, increases in the food stamp program and
foreign food aid. These measures will not solve the problem but will
create new problems.
Americans are rightfully angry about
higher energy and food prices but their anger should be directed toward
the true villains — the Congress and the White House.