Editorial
The Bay State Banner
Boston, Massachusetts
March 26, 2009

When the United States economy was more abundant, it was common for many of those who were affluent to denigrate government entitlement programs. Their contempt stemmed from two major sources: a doctrinaire commitment to an unfettered free market, and a profound objection to the expenditure of taxpayer funds for welfare, Medicaid, public housing, food stamps and other programs.

Many people believe that America is the land of opportunity, where the good life is available to everyone who works hard. They also believe that those who fail do so because of personal shortcomings. The natural corollary is that those who followed the rules and succeeded should not have to forfeit a portion of their hard-earned gains to benefit the losers.

Alan Greenspan, former Chairman of the United States Federal Reserve Board

The present economic collapse has forced a reassessment of this cold-blooded ideology. Alan Greenspan, who served as chairman of the Federal Reserve from 1987 to 2006, has been the longtime patron saint of anti-regulatory forces. In a 1994 congressional hearing on the regulation of financial derivatives, Greenspan said, “There is nothing involved in federal regulation per se which makes it superior to market regulation.”

Greenspan also refused to intervene by enacting regulations to temper the subprime mortgage problem. In April 2008, he wrote, “Bank loan officers, in my experience, know more about the risk and workings of their counterparties than do bank regulators.” While Greenspan claimed to have a feel for the financial markets, he seemed to have little understanding of the enormity of human greed.

Wealthy Americans have been concerned for some time that entitlement programs devour more than half of the budget. The mantra of the conservatives has long been to cut taxes, but they are aware that this policy is unwise without commensurate cuts in fiscal spending. Nonetheless, the costs of entitlements have proven to be intractable, and are actually projected to grow.

What was never predicted is that wealthy investors in the auto industry and financial institutions would one day be in line waiting for federal handouts to preserve their assets. Ironically, giving bailout-funded bonuses to AIG executives is sort of like allowing citizens to be on the dole. Perhaps now everyone can see that the role of government is to assure the welfare of all.

One thing to be learned is that greed has no morals. Wise regulations are necessary to hold this demon at bay. A free market system can function well only with restraints on the unfettered expression of greed.

Reprinted with permission from The Bay Street Banner, an African-American run periodical in Boston, Massachusetts.