With so much of the economy now dictated by Washington, not Wall Street, the 2012 Presidential election will have an unmistakable and otherwise disproportionate impact on the capital markets.
In real estate, the Federal Housing Administration, backed by taxpayer dollars, now guarantees a third of all mortgages, more than $1 trillion worth. And, with Freddie Mac and Fannie Mae placed into conservatorship in 2008, the government now owns or stands behind more than half of all U.S. home loans.
Already nearly half of all health-care expenditures come from government, a percentage that is unquestionably going to rise in the coming years under ObamaCare, cementing Washington's de facto monopoly in medicine.
Despite his policies and shortcomings, former President George W. Bush deserves credit for focusing on the productive ideals this economy desperately needs to counteract government control creep.
The Ownership Society, a phrase mentioned frequently by Bush in the mid-2000s, was an explicit acknowledgment of the morality of individualism in a free society. Stressing personal responsibility, economic liberty and private property, it presented an unabashedly capitalist perspective.
Individuals were encouraged to invest for their own benefit: in property, in education, health care and any other areas they desired. Government would leave markets free and open to competition. Expensive public infrastructure would be privatized. Entitlements and welfare programs would be shrunk.
Unfortunately, under President Bush, The Ownership Society meant more government intervention, including a Medicare Prescription Drug Program and subsidies for low-income earners to buy homes they couldn't afford. Bush would later solidify his non-capitalist credentials by creating the initial stimulus and bailout programs, saying "I had to abandon free market principles in order to save the free market system."
Although abandoned in both principle and practice by Bush, The Ownership Society's ideals are even more relevant and required today. The basic premise is that free individuals should have responsibility over their own lives. A moral government protects their property but doesn't redistribute it.
One need not be a University of Chicago MBA to understand how ownership of an earned asset gives you a very vested interest in taking care of it. Regardless if it's an Amazon Kindle or a car, a mutual fund or health-care services, we're scrupulous in evaluating the quality and value of things we buy with our own money.
To that end, a free society rewards those who produce values people voluntarily choose, like Apple or McDonald's, not those chosen by central planners "for the public good" like the rescued General Motors.
In a planned economy, "choices" are made by government bureaucrats where "he who writes the checks, makes the rules." From skyrocketing entitlements, soaring debt and a declining dollar, government now writes checks--and makes rules--for an unprecedented share of the economy.
The areas where government responsibility is highest--education and real estate, for example--tend to be the most distressed.
Although never actually pursued under President Bush, the principles of private property, free trade and individual choice implied in The Ownership Society would remedy the economy in a way no other stimulus can.—Jonathan Hoenig is managing member at Capitalistpig Hedge Fund LLC