From Mike Munger, a Duke University professor of economics and political science, and the Libertarian candidate for governor.
“The state is the great fiction by which each of us seeks to live at the expense of all of us.” The 19th French economist Frederic Bastiat recognized something that seems to be eluding our wise men in Washington, and Wall Street.
If Bastiat were alive, I can guess his reaction to the bailout: First, we don't know what we are doing, and we are as likely to do harm as help. The desperate hurry comes from electoral politics, and not from any real economic necessity.
Second, we aren't creating value. Government can't create value in financial markets. All we are doing is shifting costs from one group (Wall Street bankers, and mortgage sellers who took enormous and unsupportable risks) and transferring them to another group (taxpayers, who don't know any better).
When you hear someone say “The government bailout of Wall Street,” make a mental substitution: “The taxpayer-funded bailout of Wall Street.” And then remember that we have a federal debt bigger than Jupiter.
Deficits are future taxes. The bailout is simply a way of allowing irresponsible lenders to escape unharmed. If you have a mortgage, and can't pay, then you are responsible. If AIG has debts and can't pay, our leaders want to soak taxpayers for the bill.
The point is that you can't take money away from taxpayers who earned it, give it to the financiers who squandered it, and call that a good policy. There is no danger of another Depression, which was caused by a deflationary monetary policy. We are facing a temporary credit crunch, and it will sort itself out if we leave it alone. Things aren't so bad that a panicked bunch of politicians can't make it much, much worse.
Each can't live at the expense of all. Not even if you are a rich banker.
I especially liked his point about transferring the costs from the people who made poor choices to the taxpayers in general.
2 comments:
I couldn't agree more. Honestly what were people thinking? And they really wonder how this mess came about. I agree that people that were dumb enough to get into gimmicks like adjustable rate mortgages not only do they need to take responsibility but the lenders need to as well, this is what they do, you can't honestly claim that they didn't know what they were doing. I do NOT think I should take a hit for being responsible and for thinking through my choices. All I can say is people had it coming. And then here is the government thinking they can regulate the economy and "fix" it. It seems to me that every time the government tries to "fix" a problem with the economy it might help for a day but long term it ALWAYS makes the situation worse. I think all those politicians need to take a good look at what Capitalism really is because they seem to be getting a little confused with socialism.
Nice post! I'm glad it failed today so the "lawmakers" can step back & come up with a real plan so that those who screwed it up get hit with the bill.
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