Who is responsible for the housing bubble? In the National Post Terence Corcoran manfully tries to pin the blame on the Clinton adminstration.
I’m not fan of Bill Clinton, but Corcoran could have noted that the Bush White House has followed in the same path (taking great pride in the rise of home ownership as a sign of a economic health, even though it was fueled by unsustainable lending). But really the key role in the whole fiasco was played by Alan Greenspan, that great hero of capitalism and Wall Street.
Basically, U.S. policy makers like Greenspan have used cheap and easy-to-access credit as a substitute for social policy — the idea being that America’s stingy welfare state and low level of economic mobility can be justified by the fact that it’s easier for the working poor to buy houses, albeit on mortgages that they’ll never be able to pay off.
That’s why the current crisis reflects very badly on capitalism and neo-liberalism. What united Clinton, Bush and Greenspan was a commitment to an economic order that said of the working poor, “let them eat credit cards and mortgages.” Now we see the consequences.
It would have been much better to have had social democratic policies (especially in education and health care) that could have alleviated poverty rather than put the poor into a debt trap.
Corcoran’s defence of capitalism today reminds me of my Marxists friends who said that communism hasn’t been discredited — that it was only badly implemented by Stalin. In fact, actually existing communism wasn’t very pretty, and neither is actually existing capitalism.