In a CNN interview yesterday, President Bush said he was forced to sacrifice his free market principles in order to save the economy from collapse: "I've abandoned free-market principles to save the free-market system...to make sure the economy doesn't collapse." He continued, "I am sorry we're having to do it. I feel a sense of obligation to my successor to make sure there is not a, you know, a huge economic crisis. Look, we're in a crisis now. I mean, this is--we're in a huge recession, but I don't want to make it even worse."
This frank statement admits what libertarians and true free market republicans have been fighting against for months, an Executive office departure from a once ardent free market position. In the face of a financial crisis, the principles went out the window.
However, if principles can be so easily thrown out the window, then maybe they weren't really "principles" in the first place. This behavior, and the spoken position of President-elect Obama, who says he believes in the "free market" yet defends stimulus spending, bailout spending, increased taxes, and "spreading the wealth around," are indicative of the old progressive economics. Not quite socialist, not quite capitalist.
While FDR waged an open "war against business" during the progressive era, we aren't quite there yet. However, the nasty perception of "evil big business" would not necessarily fault FDR's policies to reign in business and plan the order of society. A problem with progressive economics is that it ultimately leads to excessive planning from a central source. And with limited knowledge of market demand, planning can never be as effective as free market distribution of resources.
Bush and Obama like the free market when it is driving a prosperous society, but they don't like the negatives that come with it: that there will always be some unemployment, that there will be wealth gaps, that there will be some poverty, and that there will be downturns in the business cycle. And so, as Keynesian economics tried to do, they want to tinker with the system to see if they can perfect capitalism with a little bit of central planning.
It won't work though. That is, it won't create long-term, dynamic economic growth.
While there are some negatives that come with capitalism, they are better than the alternatives that come when central planning rules the day. You can't abandon the principles of the system just when it seems like the going is tough. It is precisely at the times when we need to stand by our principles. They don't exist just for libertarians to write blog posts about them.