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  • Morning Bell: That's Enough Big Government for Right Now, Thank You

    This past weekend President Bush announced plans to host an “emergency” summit of world leaders to “overhaul the regulatory framework for global finance.” Bush offered few details on what actual policy fixes would be addressed, but British Prime Minister Gordon Brown penned an op-ed in for The Washington Post calling for unprecedented levels of “global governance,” including global standards for accounting and regulation and a “renewal of our international institutions to make them effective early-warning systems for the world economy.” Specifically, Brown wants to enhance the power and authority of the International Monetary Fund and World Bank. The Bush administration should not make the creation of a powerful new international regulatory authority a part of its legacy.

    As Heritage fellow Brett Schaefer points out, Brown’s policy proposal is based on erroneous facts. Brown asserts that “we are living through the first financial crisis of this new global age.” But this ignores the numerous banking and financial crises in Latin America over the past few decades, the Asian financial crisis in the late 1990s, and the Russian financial crisis in 1998. In each of these cases, the IMF and World Bank acted successfully help minimize the crisis. Brown even acknowledges that international cooperation on the current crisis is already ongoing and robust, including a recent agreement between the Group of Seven finance ministers on “a global multibillion-dollar package to recapitalize our banks across many continents.”

    Brown’s problem seems less that cooperation is not occurring than that it is occurring in a way that is led by national governments rather than being directed by an international authority. Instead of politically accountable elected leaders working to address the crisis, Brown wants the unelected bureaucrats at IMF and World Bank to serve as saviors of the international financial system. These institutions are cumbersome, slow and lack the expertise and standing to fulfill this role effectively. They should not be granted the sweeping authority proposed by Brown, especially when other organizations such as the Organization for Economic Co-operation and Development and the Bank for International Settlements arguably have more experience and expertise with central bank supervisory issues.

    The Washington Post‘s Sebastian Mallaby adds:

    The irony is that Britain and France will be the first to resist a serious effort to revive the IMF. British Prime Minister Gordon Brown talks vacuously about giving the organization the role of creating an early-warning system for crises, even though this is what thousands of economic forecasters already try to provide. What Brown does not stress is that serious IMF reform needs to begin with the modernization of its board. Rising powers such as China and India deserve more say. Declining powers need to give up some influence — and that includes France and Britain.

    There are undoubtedly steps that can and should be taken to make future crises less likely or severe that President Bush should entertain and suggest during his summit. But creating an additional layer of international regulation and oversight with unprecedented authority and power — especially one charged with “ensuring that globalization works not just for some but for all hard-pressed families and businesses in all our communities,” as suggested by Brown — will more likely retard international investment, financial transactions and other economic aspects of globalization that contribute to long-term economic growth in the developed and developing world.

    Quick Hits:

    Posted in Ongoing Priorities [slideshow_deploy]

    12 Responses to Morning Bell: That's Enough Big Government for Right Now, Thank You

    1. J. KELLEY says:

      The Democrats investigating the Fannie Mae , Freddie Mac scandle is like the fox investigating who ate the chickens. This needs to be turned over to an idependent council.

    2. Danny Grimes says:

      Dear Morning Bell:

      The Constitution Clearly lays' out the role of goverment. It also Warns of The Loss of Freedom.Without The Rights- in the very true meaning of propertyship, Freedom of Worship, and The pursuit of Happiness – it would be better to cease to exist than to Live. Those wo would take Freedom are to be questioned at their true motives, but never at the expense of Big Goverment- or any external spin of another culture, another Nation, or the concept of Socialism/ Communistic thought whomever who would adapt any of these such things. America is not just another Country it is indeed Unigue those who would destroy her, and it's people are not friends- but indeed her enemy.

    3. Ken Jarvis says:

      Hey HF

      Discussion is what they want to do.

      The ONLY way problems can be solved

      is thru discussion.

      Doing things the SAME OLD WAY

      IS NOT GOOD.

      KJ

      LVegas

    4. Ken Jarvis says:

      I LOVE the facts that the HF provides.

      To bad,

      they don't use common sense in their Spin, tho.

    5. Jolene, Dallas says:

      I definitely agree with J. Kelley's "Fox in the Hen House" comment. Do I trust the Democrats to do a fair investigation of Fannie Mae and Freddie Mac. I would have utmost confidence in Senator John Cornyn to investigate the problem; but I have no confidence in a Democratic committee doing so. An independent council is a good idea.

      As an American citizen who bought and paid for a home we could afford – not for a mansion that we couldn't afford, this financial mess created by greed makes me extremely angry. How dare anyone to expect taxpayers to pay for it. It needs to be thoroughly investigated, names of the culprits made public; and appropriate criminal charges made. The guilty ones need to go to prison; they need to pay back every dime.

      The claim the Democrats love to make, "failed administration" is disgusting and untrue. They, themselves, have hampered most everything the Bush Administration has tried to accomplish for the last four years under the leadership of Nancy Pelosi and Harry R.

      Jolene Atkins

    6. T. Finstad says:

      As an aside, I went to Mount Vernon this past weekend. I think I heard a rumbling that must have been patriot and President George Washington turning in his grave.

      I also have two points:

      1. I can't believe that President Bush even represents himself as a conservative Republican when it comes to the role of government in our lives. I believe, at this point, that President Bush is more pro-Big Brother than even President Clinton was during his terms in office. Not all can be blamed on Mr. Bush, but he certainly doesn't reflect the conservative fiscal policies and the beliefs of the role of government that many of us have.

      2. Haven't we all seen how unsuccessful the UN is in regulating world affairs? Yes, discussions need to be held, but how can we possibly expect an international organization to represent the best interests of individual nations, especially the United States of America? We can be assured that they will not have our interests at heart.

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    9. Arthur White, West H says:

      I saw Sen. Dodd a few days ago on CSPAN holding an 'investigation' hearing with Sen. Crapo (R) in attendence, and 4 or 5 democrat senators reading comments, then 5 or more democrats from the Clinton years reading their papers. It got too late for me to hear all the comments. There was lavish and frequent praise by Dodd and other speakers for Rep. Frank and other democrats involved in the sub-prime fiasco. Dodd claimed they had many hearings over the last few years and one-third were about the sub-prime's. It will be ages before hearings like what I saw could ever get at the roots of the fiasco!

      What a waste of time and funds.

    10. Spiritof76, New Hamp says:

      The issue is not the need for global finance reforms through institutions that has failed- the UN. The real issue is the US Congress and its push through its legislative coercion to lend money to people that can not possibly repay in the name of fairness. This practice of Democrats getting votes for useless mortgages started during Carter administration, just like so many things ignominious. Repeal of that act and dismantling of its agents, Freddie Mac and Fannie Mae will be the starting point. The government spending must be cut;the current deficit which is ballooning out of control must be reined in;must start paying back the astronomical debt of the US government; scrap of the corporate taxes and dividend taxes and finally stop printing money like it is going out of style. Step by step, we must crawl back to our Constitutional roots. There will be pain -there is going to be pain regardless of what we do- but will restore the American ideals for our grand children. After all, that is what made this country unique in the world.

    11. Sky King Indiana says:

      1. Why don’t the canidents get mean sprited and tell true facts ( I mean TRUE facts ) about the other canidate’s. This is not a sunday afternoon football game we are watching it’s the life strugle for our country and it’s people. Let’s get down to it and tell it like it is.

      It’s those jokers we put in congress who only think about their self. There are a few good one’s some wear.

      May God forgive us for forgetting _______!!!

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