Free Enterprise Just Became Kinda-Free Enterprise.

The Bush administration is taking into consideration a partial nationalization of banks, buying up part of their shares in order restore confidence in the failing markets. This goes against everything the government has been promoting for years. The United States has been the model for the global economy crusading to lift the “heavy hand of government from finance and industry.” Numerous countries have emulated our behaviors and prospered well because of it. Nobel Prize-winning economist Joseph Stiglitz explains how “people around the world once admired us for our economy, and we told them if you wanted to be like us, here's what you have to do -- hand over power to the market. The point now is that no one has respect for that kind of model anymore given this crisis. And of course it raises questions about our credibility.” The reason our credibility is in question is because our government has done a complete 180° turn. Contemplating the intervention into the private sector by acquiring ownership stakes in banks, the taking over of Fannie Mae and Freddie Mac, and the bailout of AIG clearly shows the governments new economic platform—direct involvement. With the takeover of Fannie and Freddie and the bailout of AIG our government is, in effect, now responsible for providing home mortgages and life insurance to tens of millions of Americans. It sounds even more ridiculous as I actually type this line out, but it is true.

“Many economists are asking whether it remains a free market if the government is so deeply enmeshed in the financial system.” I say no. This recent shift could be seen as proof that Washington remains a slave to Wall Street. And the countries that admired our theories are following suit. In Britain, the government has moved to partly nationalize the ailing banking system. In Asia, where they once embraced our example of free-market theories, resentment now grows over America's brand of capitalism. According to Anthony Faiola at the Washington Post this “change could shift the balance of how governments around the globe conduct free enterprise.” I have never doubted our economy but there have been times, including now, where I have doubted whether or not government intervention is the proper solution. I am unable to see how an entity that caused the problem can also be the body that creates the solution. That is why failing businesses hire consultants for an outside and unbiased judgment on the cause of their breakdown. The major shift that is occurring right now is far larger than anyone can envision because it has been proven that once our government has their hand in something they can never step away. They will just continue to try option after option, regulation, and legislation, refusing to admit defeat. Once an organization or sector becomes nationalized it will never again be privatized.