Posted by
Andrews on Monday, April 05, 2010 4:51:02 PM
If I were more interested in self-promotion, I would probably be claiming that I was ahead of the curve of political thought, especially on the conservative side. After all, back in February of 2009, I wrote "
How
To Resolve Our Current Problems" suggesting we should establish something like a Resolution Trust Company for bad mortgages, allowing them to be liquidated rather than keeping them in the flow of commerce. Similarly, in "
A
Final Comment on the Futility of a Bailout", written in September 2008, and the December 2008 follow up "
Hair
of the Dog?", I suggested that we should allow bad banks and other firms to go bankrupt, at least by passing through an FSLIC/RTC-like process, rather than bail them out. And now, I see that the
WSJ is proposing in a recent article that failed firms should follow the FDIC process for dissolving failed banks "without harming the economy".
However, to make such claims would be a bit dishonest. While I said all those things, I also said that those were a distant second choice, the path to follow if the government lacked the bravery to simply let the market take care of itself. Ideally, to my mind, the solution would be to simply let such firms fail, and allow ordinary, everyday bankruptcy processes handle the firms, regardless of their size. We have had big and small firms fail in the past, and we have survived. No firm has ever been "too big to fail", and a firm so big that is also bankrupt means that an inefficient business is tying up massive amounts of resources needed elsewhere, and so we need to liquidate it more than ever. As I argued in "", bankruptcies are actually a sign of a healthy and vibrant economy, and we should not fear them.
But politicians will never do that. First, bankruptcies cause inconveniences, even real pain, and politicians fear pain as it may be blamed on them. Second, if a big, established firm fails, it looks "bad", some may even take it as a sign of economic trouble, and politicians fear that. Finally, as change may often be a bad sign, politicians fear change more than anything. They love the status quo, as it keeps everyone from complaining. And so, politicians will ever oppose any law that allow the market to operate independently. They want nothing more than ti convince people that they are saving them from any inconvenience, and so it is very unlikely politicians will ever allow a free market to operate.
Worse still, voters, for all their talk of freedom and small government also fear a government that does not intervene when they suffer, and so they tend to quietly support intervention while loudly decrying big government. ("
Don't
Blame
the
Politicians", "
What
We
Deserve")
And finally, we have people like the writer at the WSJ, the one who wrote of her "best" solution, which was so like my distant second choice. Rather than allowing true freedom, allowing the market to work, she also suggests an authoritarian solution, primarily because she fears that allowing the market to function may "harm the economy". In other words, everyone from the government to voters to supposedly conservative business writers are all in agreement that the free market is somehow defective and will cause suffering and destruction unless it is "fixed" by the great Solons in Washington.
And we wonder why our freedoms disappear year after year? Why not ask yourself what your position was when gas prices were rising? When the "subprime crisis" broke? When the unemployment rate began to rise? How many of your answers called for government to intervene? And how often did you suggest freedom as an answer. If the former predominated, then don't bother asking why we are losing our freedom. When you denounce freedom as dangerous and destructive, you are the reason freedom is vanishing, no one else. The politicians are just a reflection of your beliefs, whether you admit to them or not.