I enjoy paying taxes

Last night I participated on a panel for Alph Kappa Psi, the business fraternity, along with a sales executive from Vanguard and a professor of finance. In discussing the economy, the recession, and the future, we had some, what seem to be very typical, skirmishes. Both the others blamed capitalism and a lack of regulation for the 2008 debacle. Both called for increased regulation of financial institutions and the separation of banking and investment banking, the power to break apart large firms and to regulate hedge funds. Why is it so difficult for people to accept that it was government regulation that caused the problem in the first place. The Community Reinvestment Act followed up with Congressional pressure to lower lending requirements and provide more affordable housing loans led to the initial problem. It was not a lack of regulation that led to the mortgage backed securities or derivites or other financial instruments based on the implicit government guarantee of mortgages. Congress had oversight of Fannie and Freddie, the SEC regulated these entities, and the Fed Reserve and FDIC regulated Banks. It was this oversight/regulation that led to the problem of subprime loans. And following the initialproblem it was government that said some institutions are "too big to fail".

The debate was fascinating -- both other panelists said something to the effect "I am a free market person, but in this case...." One even said that he was able to succeed and now be in the highest tax bracket because of government. The government provided him public education and provided his parents health care. He thinks it terrible that there are 30 million medically uninsured and he states glibly that children go hungry in this country. "I am happy to be able to pay taxes." Amazing -- I think he has been reading the New York Times too much. Let's look at the facts. There are 30 million without insurance but most of those choose not to purchase insurance because they are young and healthy or they can't buy it because they are illegal immigrants. If you subtract these people f4rom 30 million, you are left with perhaps 7 million who don't have insurance because they can't afford it. They have health care because they have access to emergency room care; they just don't have insurance. Do children go hungry in America -- not unless they are getting their mouth washed out with soap. Studies have shown that living in America at even the lowest income levels, is better than living almost anywhere else. Hunger is what goes on in Zimbabwe, Ethiopa, and other countries steeped in dire poverty.

People do not understand how the market works. To claim to be a free market supporter except in one case or another case is not to be a free market supporter. It is a slippery slope -- once you argue government should do this or do that, you are on the slippery slide. There is no other system that serves the individual, that enables people to flourish, that provides standards of living that are unprecedented in history. When professionals and academics don't see that, I wonder where the country is headed.