We'd do well to let markets function freely

The notion of market failure is an article of faith among the liberal elite these days. Whether it's Robert Reich calling for more stimulus spending or Paul Krugman's incessant complaints about capitalism, the left has developed quite the knack for intervening in the economy just enough to screw it up -- then pinning the blame on the free market itself.

More rational folks, however, understand that you can't hold the market accountable if it's not allowed to function in the first place. Contrary to what the critics would have you believe, ours is a failure of government intervention, not free enterprise. In nearly every major sector of the economy, the market has been stifled, suppressed or even abolished in the modern era.

HOUSING

Ah, yes, federal housing policy, in which affordable-housing mandates from the Department of Housing and Urban Development and elsewhere led to taxpayer bailouts of the most dodgy loans possible -- all the while bidding up home prices to unsustainable levels. Throw in easy money by the Federal Reserve, and the government-sponsored enterprises known as Fannie Mae and Freddie Mac will most likely end up as TARP's single largest bailout. Regional governments have pitched in as well, demanding all sorts of "sustainability" projects often counter to market demand.

HEALTH CARE

We haven't had a free market in health care since World War II wage and price controls. Subsequent changes to the tax code locked in place a third-party-payer system under which most Americans get their health care from their employer or government. State insurance mandates further drive up private costs, as do below market reimbursement rates by the largest purchaser of heath care -- the government. In fact, once the president's health care law is implemented, government at all levels will account for 50 percent of all health care spending.

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A recent Congressional Research Service report states that America's combined supply of oil, coal and natural gas is the largest on Earth. Yet we appear to be the only nation that denies its citizens access to their own resources. The frozen tundra of Arctic National Wildlife Refuge, as well the outer continental shelf, remain off-limits to exploration. Meanwhile, the feds and the states require the use of so-called renewables, few of which would survive in an actual market economy. No one likes oil spills, but like it or not, the American economy depends on abundant, affordable energy.

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TRANSPORTATION

Last week the Obama administration announced its new CAFE standards and ... whew! By 2025, automakers will have to double their fuel-economy standards from 27.5 to 54.5 miles per gallon. Imagine that, with the wave of a bureaucratic wand, the U.S. Department of Transportation invents new technology that the profit motive heretofore couldn't discover. Detroit once had a competitive advantage in large cars over its foreign counterparts, but the only way to meet the onerous mpg requirements is to make cars smaller, lighter and much more dangerous.

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With the exception of Switzerland, OECD data show that the United States spends the most on K-12 education of the world's major industrial powers. Though real per-pupil spending has tripled over the last 40 years, American test scores from the National Assessment of Educational Progress continue drifting downward. Notably, it is the very introduction of market incentives through school-choice initiatives that really threatens the status quo.

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Central planners love to trot out the Great Depression as evidence of market failure, but massive tax hikes by Herbert Hoover (including new tariffs) and a central bank veering erratically from easy money to tight conspired to doom the economy. Franklin Roosevelt's public works programs did little to reinvigorate the "animal spirits," merely misallocating more resources to the government. By 1938, unemployment was still hovering near 20 percent. Moreover, FDR's horse trading of industry cartels for federal collective bargaining rules froze an already uncertain business community.

But, hey, you can always blame it on the market.