Greed not the only culprit

It is the particular gift of political stars to feel pulses and tap them. Ronald Reagan sensed America’s need for renewed confidence and instilled it. Barack Obama senses Americans’ simmering rage over a shipwrecked economy and feeds it. He laces speeches with references to “an ethic of greed” that he says propelled the country into crisis. Then in bureaucratic swoops, he shatters free markets, the latest bombing run coming in the form of a thinly veiled plan to govern executive pay. And pieces of greatness fall.

The Obama administration charges that executive contracts encouraged short-term risk-taking blind to the hidden hazards that bloomed into a banking collapse. Most observers concede this, at least to a point. But Obama ignores his party’s part in greasing skids for the slide.

Starting with the 1978 Community Reinvestment Act and accelerated in the Clinton years with the approval of Massachusetts Rep. Barney Frank, Democrats urged banks to lend money to people who fell below those institutions’ traditional credit standards. Cash flowed from Washington to further the trend, prodding banks to venture to limbs’ edges in pursuit of fatter profits. Then the bough broke.

This is not a suggestion that the greed Obama cites was not real. But it was government-fed greed centered on mortgage products that Obama’s allies created. And it was not corporate greed alone but greed on the part of some of leftists’ ostensible beneficiaries, people who signed their way into homes at terms beyond their means, not because they were simple victims of the system but because they didn’t count the cost, and weren’t especially interested in knowing it.

What Obama appears most acutely to despise is the free market. It is perhaps symbolized in his mind by Gordon Gekko, the slick-haired capitalist lizard of “Wall Street” movie fame, who declared, “Greed ... is good. Greed is right. Greed works. ... Greed, in all of its forms – greed for life, for money, for love, knowledge – has marked the upward surge of mankind.” In Gekko’s case, it also marked a trip to the slammer for insider trading.

That free markets are in no small part driven by greed is no secret. But the criticisms of Obama and members of his ilk inclined toward alternative economic systems neglect other truths.

First, greed, like other deadly sins, is a human condition that pervades all of man’s systems. Obama, who likes to tamp things down, cannot tamp down greed by shredding free markets. It will persist as it has since man first learned the art of turning a profit. No human system can subvert the nature of man himself.

Second, while free markets reward people who build success compelled by greed, so the system, if left unchecked, tears down those carried away by excess, people whose vision fails to account for the cruel judge that is risk. Other systems, like socialism and communism, confine opportunities to a select few and then shield that group within government’s protective embrace. Their greed and other vices are unrestrained.

Free markets, above all, punish incompetence. This, and not greed, is what doubled over the American economy. Absent bailouts, the system now would be setting about separating chaff. “Business downturns serve essential purposes,” historian Paul Johnson observed, ridding the economy of those who sap rather than feed it. No system did this better than America’s. Until now.

Once, this was a place where people recognized that some hardship arose on occasion but rather than a thing to be gotten rid of by any available means it was to be endured like a string of rainy days with the confidence that the sun again would beam. Hucksters of every stripe arose then passed into the night, their want of heed as much as blind greed dispatching them to the darkness. Time, more reliable than attempts to circumvent human nature by way of wage fixing, inevitably would snare the fools in traps of their own devising.

Obama, whose messianic bent is the stuff even of his own self-deprecation, fancies he can save America from such people. But what of America might remain once he has finished?