Writing in the Washington Times, economist Richard Rahn observes that those in power (or who have been in power and perhaps long for it again) are apt to whitewash government screw ups. The recent intellectually dishonest report on the causes of the financial meltdown is Rahn’s first exhibit. How is it possible to discuss that event without acknowledging that federal housing policies created an enormous moral hazard problem?
Here is Rahn’s conclusion:
Public choice theory explains why government officials and bureaucrats put their own interests ahead of the interests of those who they are supposed to serve. Those in favor of ever bigger government ignore this fundamental reality, which is demonstrated time and time again. The American Founding Fathers implicitly understood this, which is why they tried to design a system to protect people from government. Recent events have shown that their fears were all too justified.
