I wrote the following letter in response to this Denver Post column which farcically accuses the democrats of wanting to end capitalism:

Sir,

In the conclusion of your 8/28 column in the Denver Post you conveniently ignore the fact that George W. Bush Administration and their republican majority in congress for six of the last eight years is responsible for the largest increase in the size of the federal government in history. I commend your ability not to let facts stand in the way of your ideological viewpoint.   Another glaring fault of your analysis is the laughable straw-man argument citing a desire on the part of democrats to rid the world of capitalism. First, Obama does not want to end capitalism, rather make it's outcomes more fair by removing government interference with the efficient operation of markets, and using redistributive tax policies that benefit 95% of taxpayers rather than disproportionately benefitting 1%. Second, we do not have capitalism in this country rather a form of mercantalism in which our federal government props up our sacred cows again and again - airlines, banks, carmakers, telecoms, etc... - rather than allowing them to fail as would happen in a capitalist system. Frankly, Adam Smith would be appalled. In the future, you should refrain from conflating the two economic systems.   You seem to willfully ignore the real consequences of our nation's economic troubles. Our trade imbalance means Americans standard of living must fall relative to that of our trading partners to correct the imbalance, as has been happening over the past several years through the declining dollar and now through higher inflation. Our housing market is backed by public/private hybrid institutions that issue debt backed by the value of American's mortgages, 35-40% of which is owned by foreign treasuries. This means the market for housing finance is at the mercy of foreign governments willing to continue to buy our debt. That this demand has dried up helps explain rising mortgage rates that are one factor holding back a housing market recovery. It also prodded Paulson to take extraordinary steps to make the government backstop of Fannie and Freddie explicit since they have over $200 Billion of this debt to turn over by the end of September. Furthermore, in order to avoid a collapse of the financial system, which you seem to feel is perfect beyond all question, the Bush administration had to nationalize $30B in private assets of Bear Stearns, likely creating a large loss for the Fed and ultimately taxpayers. At the same time the Fed allowed JPMorgan to place the interest of shareholders in an otherwise bankrupt company above that of taxpayers. That sounds awfully like socialism for a market participants to me. And you're arguing that Democrats are "against capitalism"? What are the Republicans for again?   Unlike many market fundamentalist who deny this fact, Obama understands that markets were not born through immaculate conception. Markets are human constructs whose outcomes are not determined in a vacuum but by the rules which govern them. For example, you'll have no doubt have noticed the effect of the SEC Short-selling ban on the stock prices of financial companies included in the ban? That small change had a demonstrable effect on market outcomes for the period it was in effect. With an insight into economics, Obama understands that tax subsidies intended to stimulate domestic oil production in times of low prices only create market distortions when oil companies are reaping record profits. This makes oil cheaper than it should otherwise be and deters otherwise profitable investment in the marketplace for alternatives. The fact that the negative externalities of oil aren't reflected in the price (as they would be under a carbon tax or cap-and-trade scheme) mean oil doesn't reflect its true cost and is instead it is kept artificially cheap by government policy. This is a market failure, just like the market failure you cite, created by Congress's attempt to "pick a winner" with subsidies for ethanol.   However, subsidies for alternative energy production are not, in themselves, a market distortion. For instance, Obama proposes broad subsidies for all non-fossil based energy sources to help them compete with traditional sources and would let the marketplace choose the "winner" as you yourself advocate. If you check Obama's website more closely, you'll find his windfall profits tax is actually good economics in populist clothing. It is a surtax on barrels of oil sold above $80 a barrel - which, besides helping to keep the most expensive to produce and environmentally disastrous types of oil from becoming viable, reinforces market signals that impact consumer behavior. As this summer has shown, changes in consumer behavior which reduce demand now and create expectations of continued reduction in demand have the clearest impact on oil prices, not gas-tax holiday or the "psychological" effects of promises of future drilling. To ease the pain of transition, Obama's plan includes energy tax rebates to those who lack the financial resources to quickly adjust their behavior.    Ironically, McCain's health-care plan is based on similar economic principles, though his plan still fails to address the central failure in the market for health insurance - young, healthy people are more likely to drop out of the coverage pool. Obama, a professor at the institution from which Milton Friedman emerged, understands this. While you and your fellow Republicans seem to be wearing a red filters over your eyes, Obama will use a good idea regardless of its ideological source.   Regards, Ryan Hadley