Why Laissez-faire Doesn't Work Today

I find it laughable that I, on the cusp of adulthood and having only one economics class under my belt, may have more wisdom in business than a Harvard and Stanford-educated economist, who happens to be the Chairman of the Federal Reserve. I am not gloating, nor do I fancy myself wise in the areas of business and economics. Rather, I am infuriated that one with a high level of concentrated education who should know the ins and outs of economics, not only supported free trade with communist countries, but was handed the position of a Federal Reserve governor with few questions asked and little experience. Ben S. Bernanke must now suffer the consequences of being deemed an idiot, and partially carry the responsibility of leading the US into unpardonable debt. 

Once again, if it wasn't such a serious issue, it would almost be comical. Bernanke, back in the day when he was an ignorant and idealistic Fed governor, said that the problem with our economy was not that Americans spend too much money, but that foreigners save too much, namely the Chinese. 

Well, Bernanke, unfortunately when it comes to economics, it's not all warm and fuzzy, and not everyone is the good guy. We aren't righteous in our spending and China is at fault for much more than frugality . With the approval of Bernanke and the Federal Reserve, China has invested approximately $1 TRILLION  in our government bonds and mortgage debt, in the manufacturing of [cheap] exports, and in lending money to the US at a very low rate (not only is this dangerous for our pocketbooks, but at any point, the foreign lenders could withdraw their money, and exponentially lower the global value of the American dollar. Financially, we should be slaves to China. And what has America been up to during China's great age of investment? Spending and borrowing abroad for consumption; bingeing on consumerism. And now, we face the colossal headache of economic hangover.

This idea of free market or "laissez-faire", translated to "hands-off",  doesn't work today because of the mindsets of the buyers and sellers. While Americans, the buyers, continue to cling to the false assumption that the US is still #1 (check it out: value of US dollar), and will blame all financial shortcomings on the government, and China, opposite on the spectrum, views our ignorance and unwillingness to take personal responsibility as a great financial opportunity, and will take advantage. The free market doesn't work because people are people. Some are ignorant, greedy, some unwise and some shrewd. People left to themselves will somehow always create chaos. That is why we, as Americans, need guidance, that is why we have a government. One definition of "govern", according to the Merridian-Webster Dictionary: "to rule without sovereign power and usually without having the authority to determine basic policy." Government is NOT responsible for all of our economic shortcomings. So why do I chastise Bernanke? Maybe his own words (after admitting to the damage caused by the United States' affair with "laissez-faire") will help explain. 

“Achieving a better balance of international capital flows early on could have significantly reduced the risks to the financial system. However, this could only have been done through international cooperation, not by the United States alone. The problem was recognized, but sufficient international cooperation was not forthcoming.”

While it's obvious that international capital flow requires international cooperation, Bernanke yet again fails to see the US citizens' fault, which I thought was unabashedly, crystal clear as well. 

Since we are in the middle of this economic maelstrom, we can shore up our economy by cleaning up our act. Here is my observant advice:

American Citizens: STOP acting like bratty, spoiled rotten children! The government officials are not our parents, we vote them into office to guide us, not to take responsibility for our childish and ignorant antics. STOP BUYING ON THE MARGIN!!!! If you don't have the money, don't spend it. It didn't work in the 1920s, and it isn't working now. Both instances have brought on economic depression, so we should learn from our mistakes and consume responsibly. 

US Government: STOP treating us like your babies. Don't assume our responsibility. We need to learn from our mistakes, so let us know when we are at fault. No one likes the parents who defend their children despite their debauchery, so quit acting like them (by the way, you are not the parents of the US). And STOP trusting communist leaders. 

Sources: 

http://www.nytimes.com/2008/12/26/world/asia/26addiction.html

http://www.federalreserve.gov/aboutthefed/bios/board/bernanke.html

http://useconomy.about.com/od/tradepolicy/p/Dollar_Value.html