Saturday, December 20, 2008

When Idealism Becomes Realism

Many of the things that have come home to roost lately are things libertarians have been warning against for years. Back then, it was the stuff of conspiracy, of loony tinfoil hat wearing eggheads, studying things that looked like such minutiae in the glory days of the 90s bubble.

So, let's look at some of the things that we are doing now, and consider that we were right on our predictions then, so we might just have a grasp on what to expect with what is being done now. We looked idealistic then. Applying our principles now would be a good, necessary dose of realism.

The bailouts are a disaster. It is said that these businesses being propped up are too big to fail, or too important to just stand back and do nothing about. So, our federal government, with bi-partisan Republican and Democratic support, is giving them money.

If the problem is that President Bush approved budgets submitted by Congresses that had majorities from each party that were characterized by deficit spending, and much of our economic distress can be traced to our deficit, does it make sense to expand or contract the size of government, and therefore the cost of the government?

If the problem in lending is that lenders made bad, greedy decisions in making certain loans, which would correct the problem most swiftly? Letting them fail on the outcome of those decisions, or rewarding them?

If the problem is that borrowers took loans that they had no hope of repaying, or put them in a situation that they were one hiccup from foreclosure, which would correct the problem most swiftly and make sure it doesn't happen again? Letting them fail on the outcome of having extended themselves dangerously, or forgiving that behavior?

If the problem is that some automakers have legacy costs so severe that they cannot compete with others, will they be inclined to address their legacy cost issues if they are flush with cash, or if they are on a tight budget?

If the problem is that companies' executives lavish themselves with outlandish compensation packages, will that problem be best corrected by giving the companies free money, or if they have just enough to continue operations?

We can look at some local issues, too.

If the problem is that citizens of Indianapolis feel unsafe because of violent crime in the city, will they feel safer if they, as law abiding citizens, are stripped of their guns? Or, will they simply move out of Indianapolis for the suburbs, leaving the criminals who are not inclined to follow the law to remain, making the city even more violent and criminal?

If the problem is that employers leave the city for a rural area because of high taxes, will more businesses stay or leave if taxes are raised?

How is additional regulation supposed to fix these problems? Why are we putting our faith in more government? Americans have looked to the past for clues, and are convinced that we 'did nothing' about the problems that led to the stock market crash of 1929, and therefore created the Great Depression. Whatever the merit to that argument, it does not correspond to today's situation, where doing nothing would be exactly the right tonic for bad lenders, bad borrowers, and bad business leaders. It would be corrective, and instructive. It would also be just.

I cannot think of anything more unjust than what we are doing right now- taking from everyone to reward failure. It's just as wrong as wrong can be. It's wrong from an idealistic standpoint, and from a realistic standpoint.

Well, maybe we could do something. Our leaders could be leaders, and send the right signals to the people, by browbeating all these groups in public forums.


varangianguard said...

I don't think I said "did nothing"? I think I said "did the wrong things".

I will have to admit that nobody in charge seems to have learned that lesson.

Mike Kole said...

True, you didn't say 'do nothing', but an awful lot of commentators have.