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dustrialized nations, though spending the most per student. As federal involvement grew with President Carter’s new Department of Education, things grew steadily worse.
• Take the drug war. We can’t put all the blame on government here either; without customers (us!) there would be no drug problem. It is a failure.
• Take the savings and loan fiasco and growing bank failures. Government’s hand, i.e., deposit insurance and “supervision,” led to disaster. How? Freed from concern over the safety of our deposits, we paid no attention to the management or reputation of the places where we put our savings.
We don’t act that way in choosing a garage to repair our car or a doctor to mend our bodies! Government promises lured us. Government failure to provide needed supervision, allowing some S&L, executives to lend foolishly and deplete - in some cases, to steal - their associations’ capital, led to huge losses.
• Take monetary policy. The Federal Reserve was created about 1912 to “solve” America’s money problems, smooth out the swings of the business cycle. Has it worked! No! We’ve had many recessions, including today’s, and a major depression, and the value of money has fallen 90 percent since 1940.
In America’s first century, without a Fed, we became the richest, most powerful country on earth, a magnet for millions. In those days the government was tiny; even by 1940 the average family paid two percent of its income in federal taxes; today 24 percent. Could there be a lesson there?
You may wonder why so many government programs fail. The answer is simple: government, a political creature, responds to problems in a political way. That’s fine if the problem is political. It is a disaster when it is not.
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