However, neither McCain nor Obama has adequately addressed the financial crisis and what policies they will advocate to correct. It seems a bit ironic that free market capitalism is being blamed for what has predominantly been a government-induced mortgage bubble and House members seem to be ducking under the radar. But it falls to market advocates to explain how and why and so far political conservatives have been quite disoriented.
Daniel Henninger of the Wall Street Journal wrote a decent article on Oct 2 about the larger political context of moral hazard (link here - subscription may be req'd). He writes:
This subject -- risk and political moral hazard -- should be at the center of our derailed presidential campaign and its debates. Liberals don't like to hear moral-hazard arguments raised against social-policy goals. The current mortgage nightmare, however, grew primarily from Congress's insistence on increasing home ownership by reducing its risks.
Barack Obama's core proposals on health insurance, trade policy and tax credits all seek to reduce an array of economic risks. John McCain's ideas on health, education and the tax code tilt toward "choice," or letting individuals make judgments about economic risk-taking.
Most of the time, moral hazard is simply academic. Not after this week. Our presidential candidates should have a talk about it.
This is what this election should be about, but it doesn't seem like the political establishment is able to focus.
The result may give us the only purely liberal US president of the post-60s modern age. This combined with a House and Senate that is far more liberal than the population. It will be interesting to see how a center-right polity reacts to future policy proposals that reflect a left-leaning ideology. A bunch of counties on the border between CA and OR want to secede and form their own state. Good luck with that.
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