Straw Man Capitalism and a New Path to Prosperity‪.‬

Soon after the $700 billion Troubled Asset Relief Program (TARP) became law in October of 2008, the Washington Post ran a widely acclaimed article entitled "The End Of American Capitalism?" (1) The article called into question the supremacy of capitalism and the durability of free markets in the wake of the financial crisis. The same theme appeared in countless articles in the months that followed. By April 2009, a poll found that only fifty-three percent of American adults believed capitalism to be better than socialism. (2) This lack of confidence in capitalism provided the setting in which President Obama pledged "to act boldly, to turn adversity into opportunity, and use this crisis as a chance to transform our economy for the 21st century." (3) Public expenditures have gone toward bailouts of failing firms, economic stimulus plans, Cash for Clunkers, and other proactive government policies aimed at pulling the U.S. economy out of recession. President Obama's pledged transformation has been a multi-trillion dollar failure and offers new evidence of the bankruptcy of countercyclical government interventionism as a means of economic recovery. If the short-term effects of these programs have been disappointing, the long-term effects of the nearly three trillion dollars in additional debt will be even more debilitating. I. THE TRANSLUCENT HAND