Barack Obama has expanded his call for stricter control of the US financial sector into an across-the-board attack on the laissez-faire economics championed by Ronald Reagan, pursued by President George Bush for the past eight years, and embraced by the Republican candidate for the White House, John McCain.
Cutting taxes while raising spending at a record rate and increasing burdensome regulations is not laissez-faire. As Tyler Cowen says in the New York Times:
THERE is a misconception that President Bush’s years in office have been characterized by a hands-off approach to regulation. In large part, this myth stems from the rhetoric of the president and his appointees, who have emphasized the costly burdens that regulation places on business.
But the reality has been very different: continuing heavy regulation, with a growing loss of accountability and effectiveness. That’s dysfunctional governance, not laissez-faire.
Still, the Bush administration’s many critiques of regulation are belied by the numbers, which demonstrate a strong interest in continued and, indeed, expanded regulation. This is the lesson of a recent study, “Regulatory Agency Spending Reaches New Height,” by Veronique de Rugy, senior research fellow at the Mercatus Center at George Mason University, and Melinda Warren, director of the Weidenbaum Center Forum at Washington University. (Disclosure: Ms. de Rugy’s participation in this study was under my supervision.) For the proposed 2009 fiscal budget, spending by regulatory agencies is to grow by 6.4 percent, similar to the growth rate for last year, and continuing a long-term expansionary trend.
The Republicans and their flagrant misuse/abuse of free market-friendly language (they sometimes talk the talk but never walk the walk) has poisoned the "laissez-faire brand." While it's generally contemptible for any politician to bash self-interest and risk taking (i.e. the things that make our society prosperous), I think it's actually a good thing for McCain, as he carries the banner or Republicanism, to do just that, as hopefully his doing so will work to diminish the false association that many people have between Republicans and free-market economics, and in turn reduce the damage to the laissez-faire brand that such a false association has caused.
Bottom line: blame the current financial situation on Republicans all you want...I'm sure they're plenty guilty. But don't make the intellectually lazy mistake of blaming laissez-faire policies by association. Republicans aren't laissez-faire, and laissez-faire is not what caused this mess.