Milton Friedman has been dead for two years, but he still makes more sense of the current economic crisis than anybody else:
Would Milton have seen the crisis as a setback for capitalism?
Only in the short term.
"If this election goes the way it looks as though it's going to go," says Tom, "then the political system is about to get a major overcorrection to the left. And that means the American people are about to get an extreme illustration of just how badly government intervention screws stuff up."
"If Milton were here," Tom says, "he'd tell us to remember what happened during the Clinton administration. After just two years, the Republicans ended up in control of both houses of Congress."
Either the liberal establishment in Washington will go too far and the electorate will correct its overcorrection, or the fear of such retribution will keep the liberals from going too far, which would be OK, too. Of course, they could go too far in ways that might not be apparent in two years, in which case we really will be screwed.
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Assuming, of course, that Friedman's theories were accurate. The socialist economies of western Europe cast doubt on whether a largely unfettered market is the best road to a generally happy population. (That raises the question, I suppose, as to whether something other than general happiness is the proper goal of economic policy.)
These economies have their own problems to be sure and might not be sustainable in any case. But surveys generally find that their people are happier with their lives than Americans. Maybe we're just grumpy by disposition.
Flood control on a river seems like a good analogy. Long term and from a really broad perspective, it's probably more beneficial and sustainable to let the river flood naturally. Short term, and particularly if you live near the river, you want to build up the levees. Similarly, short term and if you aren't on the economic high ground, you want government to mitigate the boom and crash nature of unregulated markets.