When you, Joe Citizen, spend frivolously and default on your loans, the bank takes your house. When the government spends your tax dollars frivolously, it simply cooks the books to cover its excesses. When the books are left in ashes, the government just takes more of your money, or it prints more money, leaving the money it hasn’t already taken from you devalued. Over the last few weeks, we’ve learned that you now face the prospect of an additional indignity: When your neighbor’s bank spends frivolously and defaults on its loans, the government’s going to take your money then too, to keep the bank in business.
Many commenters have blamed all of this on capitalism. This isn’t capitalism. It’s a peculiar kind of corporatist socialism, where good risks and the resulting profits remain private, but bad risks and the resulting losses are passed on to taxpayers. There’s nothing free-market about it.
Category: Random News
The Most Interesting Points Can Not Be Put In Your Footnotes!:
In the early ’30s, Mises reminded people that what they were living through was not the crisis of capitalism, but the crisis of the interventionist state. We are about to have another lesson in what Mises meant by that.
No Atheists in Foxholes, No Libertarians in Financial Crises:
This is the line that Paul Krugman uttered the other night to some great yucks from the Bill Maher crowd.
Not really an original thought for Krugman — see Jeff Frankel’s remarks from last July.
Krugman in typical fashion communicates his point in a smug fashion and implies that only someone completely bonkers would maintain a libertarian stance. But the reason we are in this mess to begin with is because we weren’t bonkers enough to pursue libertarian economic policies. Instead, statist intervention in financial markets has been pursued for decades. Government policies that privatized profits, but socialized losses; easy credit monetary policy; regulations which favored some groups at the expense of others, etc. all created our current mess. NOT free markets, and only free markets will permit the adjustments to economic realities that are required to get the market economy back on-track.
I don’t know about atheists in foxholes, but I do know that only economic libertarianism can get us out of the mess of political capitalism we are currently in. To argue otherwise, as Krugman and his crowd do, not only belies a fundamental lack of economic understanding, but an innocence of public choice.
Poll: Most oppose govt. intervention:
PRINCETON, N.J., Sept. 23 (UPI) — A Gallup poll taken this month indicates most people believe government is doing “too many things that should be left to individuals and businesses.”
What’s clear is that a bunch of financial institutions have made mistakes and lost money. What’s unclear is why anyone (other than the owners and managers) should care. People make mistakes and lose money all the time. Restaurants fail, grocery stores fail, gas stations fail. People pick the wrong stocks, they buy the wrong cars, and they marry the wrong spouses without turning to the Treasury for bailouts.