Every once in a while I hear comments from Americans and even their politicians about how pink Canada is, considering that Canada has publicly funded social net programs such as, a national health care system, welfare, (un)employment insurance, and other social programs.
Historically in Canada, the government has been much more involved in running many publicly owned companies (both at the provincial and federal levels), while Americans have often criticized any direct government involvement in the economy –stating that government should only referee and that the market should decide those that stay in business and those that don’t –via the the often touted (but inaccurate) darwinist based principal, “fit of the fittest”.
Considering the above, was anyone else surprised that Freddie Mac and Fannie Mae –America’s largest mortgage backers– are being nationalized by the US government? What happened to the concept of the government not meddling directly with the economy?
The announcement came on Sunday Sept. 7-08. Administration officials will no longer have say over company dealings, until the government sets the companies right. Both companies are said to hold about half of the American housing mortgages.
To be honest, I don’t think that Freddie Mac and Fannie Mae shouldn’t be helped out, as I don’t hold extremist views on either side of the argument. I’m just pointing out the hole in American rhetoric. To be fair about the point on social programs, I’ve been informed that there are many, many social programs in the States. They just aren’t run by the government, but run by or as charitable organizations. I just don’t like it when Canada is called pink.
Update: As for how long the backing companies should be run by the government, I think just as planned, this should be as long as it takes to get the companies on their feet again. I’ve recently been told that the belief that private companies run more efficiently than public ones is scientific fact, but as for assuring the best product at the cheapest price … this only happens as long as there is competition. I assume that the two companies were set up to do just that, compete against each other.
As for not assisting them, the fact that they back about half of all mortgages should tell you that letting them go under would be disastrous for the US economy, as well as the world economy. So, this is not an option. I’m starting to realize that it’s not a matter of politics as much as economics that is important in today’s world, or rather politics allowing and encouraging the running of a fine tuned economy.
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