Welfare state failures are at bottom of the crisis

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As our financial markets totter, as homes go into foreclosure, as Wall Street executives lose millions, as Americans have more and more difficulty getting loans, can anyone be happy?Certainly. Those on the left who now, with unbounded glee, pen obituaries for the free market.One can sense their joy as they have, they think, the last laugh.Bernie Sanders, the far left senator from Vermont, was almost giddy on Larry Kudlow's TV show recently to hear free-marketer Kudlow endorse the bailout and tell Kudlow that he is glad to see he has become a socialist.The Washington Post's Harold Meyerson writes, "The old order -- the Reagan-age institutions built on the premise that the market can do no wrong and the government no right -- is dying."And, of course, there's the thrill in seeing greedy Wall Street capitalists laid bare for the heartless, exploitive monsters they are and see justice done as they fall by the free market sword by which they lived!But, in fact, what we are watching is not a failure of markets, but the latest failure of the welfare state. The sad part is how few who wield political power seem to understand, or want to understand, that this is what's happened.As the details behind the current debacle are unraveled, we see how government created one more entitlement -- the right to own a house -- and then devised an array of programs to subsidize in various ways "affordable housing." Like all welfare programs, the subsidies succeeded in influencing behavior, but the wrong behavior. The greedy part, or, if one wishes to be forgiving, the confused part, of the Wall Street guys is their willingness to play ball with politicians over these years in turning our free country into a welfare state. Wall Street has regularly been a generous contributor to politicians who love to grow government and use it as a tool for social policy.These smart investment bankers, commercial bankers, and traders could have gotten plenty rich, and stayed that way, by encouraging solid institutions to build our country properly. If anyone should appreciate the power of freedom and markets and want to encourage the proper role of government, the integrity of private property, and the care and nurturing of American families, you'd think it would be our financiers.But instead of recognizing basics -- the principles of limited government and traditional values -- and fighting political pressures to undermine these basics, our financiers were happy to support the welfare state model.They should have appreciated, as we must appreciate today, that the problem is not a failure of freedom and markets but of eroding the pillars and principles that make them possible and functional.The best housing program this nation could have is for the government to stay out, let the price of real estate and credit reflect true realities of supply, demand, and risk, and let private people decide for themselves what they need to do and how hard they need to work to acquire what they want.As the institution of government grows, we sadly watch the collapse of the institutions that really sustain growth of home ownership: American marriage and families.According to the Census Bureau, the single largest incidence of homeownership, 86.3 percent, is among married-couple families. Yet, traditional families now amount to barely more than a quarter of our households.And, sadly and ironically, the problem of family structure is most severe in low- income communities where government housing policy has been most targeted.Social and economic policy are not separate universes but part of one fabric of institutions and laws that sustain freedom and prosperity.Those who want to use the current crisis as an excuse to expand government and welfare state policies contribute to laying the foundation for our next crisis.(Star Parker is president of CURE, Coalition on Urban Renewal and Education (www.urbancure.org) and author of three books. She can be reached at parker(at)urbancure.org. For more stories visit scrippsnews.com)