The Winner of Last Night's Debate? Washington

Both candidates embrace central planning as prudent economic policy

"We're gonna have to do something about home values," presidential candidate Sen. John McCain (R-Ariz.) said at the beginning of last night's debate. Wait, was that a Republican nominee suggesting that the federal government has a causus belli to intervene when market prices go down?

You bet your assets.

"I would order the Secretary of the Treasury to immediately buy up the bad home loan mortgages in America and renegotiate at the new value of those homes, at the diminished value of those homes and let people make those, be able to make those payments and stay in their homes," McCain said. "Is it expensive? Yes."

Is it yet another McCain Hail Mary pass in a campaign that will soon be remembered for nothing but? Also, yes. And it was the latest indication in a grim season for free marketeers that there is no corner of American life that leading politicians aren't eagerly lining up to nationalize.

This should be no surprise, neither to people who've been following John McCain's economic incoherence closely, nor for those who've merely watched the pro-centralization hysteria of the man he aims to replace. But last night's debate hammered home that we are truly entering the re-regulation era, at least if Washington politicians have anything to do with it.

McCain, obviously, was not alone. Sen. Barack Obama (D-Ill.) repeated his detail-free contention that it was "deregulation," not the implosion of the heavily regulated Fannie Mae and Freddie Mac, that caused the subprime meltdown and the current financial crisis. "A year ago," he bragged. "I went to Wall Street and said, we have got to reregulate."

The Democratic nominee repeated his pie-in-the-sky idea that Washington-led industrial policy on energy can create "5 million new jobs," and magically transform the economy like, uh, the personal computer? "Energy policy can be the engine that the computer was the engine of our economy," he said, hinting at a fascinating alternative history whereby Mssrs. Hewlett, Packard, Jobs, Wozniak, and Gates were all products of central planning. "That's why we've got to make some investments."

Moderator Tom Brokaw gleefully got into the central planning fantasy life, wondering whether we should "fund a Manhattan-like project that develops a nuclear bomb to deal with global energy and alternative energy or should we fund 100,000 garages across America, the kind of industry and innovation that developed Silicon Valley."

These kind of late-campaign enthusiasms for massive new federal intrusions into the economy might play better as entertainment if it weren't for the uncomfortable fact that the distance between bad economic ideas and new signed laws has been almost historically short over the last few weeks. The ground is moving under our feet, or at least under the feet of Washington and those who cover it, and if we're not careful we will wake up in a few months with the already historically bloated and indebted federal government owning a piece of every private decision in America that didn't turn out well. Airlines bet wrong on the price of oil? Here's your bailout, sir! Did you bet on the Angels instead of the Red Sox? Step right up, Main Street!

It is a whiplash-inducing thing, having lived through the Central Europeans' response to their much-graver "economic crises" of the early 1990s—basically, getting the government out of the ownership business, and letting the sold-off chunks fail if need be—and then coming back here to see both major political parties and the establishmentarian media get a national case of the vapors when a decade-long credit binge finally dries out a bit, and unemployment ticks up to a once-enviable 6.1 percent.

There once was something approaching consensus in the industrialized world that central economic planning was for losers. If this is how quickly America's leaders lose faith, I would hate to see the kind of solutions on offer if things actually do get as bad as they all predict.

In the meantime, we are also witnessing the full flower of what happens when a Republican who has never really worked in the private sector, who emulates the Wall Street-bashing of Teddy Roosevelt, and who has been explicitly railing against the "libertarian" wing of his own party for more than a decade, finally sees his lifelong prize dangled tantalizingly within his grasp. If you thought his economic policies were bad back before he ever had a real shot at the White House, is it really any surprise that in a time of high financial anxiety he's running to the economic left of Bill Clinton?

The only good news for all of us, once again, is that one of these two men will lose on Nov. 4. One senses, however, that the fight over re-regulation has only just begun.

Matt Welch is editor in chief of reason.