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Monday, July 21, 2008

The Economy, Washington and the Media

When things get ugly in the economy, politics too often takes a turn for the worse as well. That is, populist rants multiply, as do bad ideas for greater government involvement in the economy.

In the July 19 Wall Street Journal, a piece by Greg Hitt titled “Economic Owes Get a Fix: Witch Hunt” highlighted this unfortunate reality. But it also revealed that the media usually falls into the same trap.

Hitt correctly pointed out that the typical response by the political establishment to economic turmoil is “going on a witch hunt.” Hence, we’ve seen political attacks on short sellers, oil traders, and, of course, oil company executives. In addition, Hitt notes that pharmaceutical companies will soon “come under fire at a congressional hearing.”

These are glaring examples of silly politics overriding sound economics.

But later in this piece, Hitt says that Washington policymakers “have groped for more substantive responses to the nation’s economic woes.” Really? Where?

Well, unfortunately, Hitt’s idea of substantive responses means government bailouts, that is, of homeowners, Bear Stearns, and Fannie Mae and Freddie Mac. Those responses, of course, are anything but substantive. They might not be witch hunts, but they amount to further examples of economic ignorance and political pandering.

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