It’s amusing to see liberals exclaiming against the bailout of the Wall Street big wigs. After decades of using government to take from the rich and middle class to give to the poor, did they honestly believe that politicians and bureaucrats would not use their welfare-state powers to take from the poor and middle class to give to the rich? What’s fascinating is that some liberals are able to recognize the fundamental immorality of using government force to fleece the American people for the benefit of Wall Street friends and cronies, but they still maintain a blind spot when it comes to using government force to accomplish the same thing for the “poor, needy, and disadvantaged.”
Of course, it’s also amusing watching conservatives come up with all sorts of rationales for using taxpayer money to bail out their buddies and contributors in the financial sector. “Oh, it could be another Great Depression! Oh, we’re so worried! Oh, we’re facing a worldwide financial collapse! Oh, woe is us!”
Give me a break. Aren’t these the guys who were just recently exclaiming against Hugo Chavez’s government takeovers of Venezuelan businesses? Didn’t they call that socialism? What’s the difference in principle between what Washington politicians and bureaucrats are doing and what Chavez has been doing?
Unlike liberals and conservatives, who continue to claim that the crisis is due to “greed,” “unfettered capitalism,” or “deregulation,” we libertarians know that what has once again failed is socialism and interventionism.
The current financial crisis is a classic example of Ludwig von Mises’s point about interventionism — that one government intervention into economic activity inevitably leads to more interventions. Why? Because the initial intervention inevitably brings about a crisis, which then motivates the politicians and bureaucrats to enact a new intervention, which then causes another crisis. Ultimately, the long series of interventions lead to omnipotent government — a total control of economic affairs on the part of the federal government.
For decades, the federal government has intervened in the housing market, enacting laws, rules, regulations, agencies, and tax benefits to encourage everyone in America to own a house. That’s what Fannie Mae and Freddie Mac were all about — using the federal government to encourage banks to lend money for home ownership. That’s what all those regulations requiring banks to lend money to bad-risk customers were all about too. That’s what the mortgage deduction from income taxes is all about.
Now that the bubble from all this interventionist malinvestment has burst, what is the response of the interventionists? To enact a new comprehensive intervention entailing hundreds of billions of dollars of taxpayer money in the hopes of keeping the entire house of cards propped up for another round of interventions down the road. Moreover, the plan to vest the Treasury secretary with unprecedented powers moves our nation closer to the omnipotent, dictatorial government to which Mises referred.
What is the answer to all this socialism and interventionism? Eradicate the disease entirely with major surgery. Restore a libertarian paradigm to our nation. No more interventions and no more socialism. No more income taxation or income-tax deductions. Leave everyone free to keep his own money and do what he wants with it. No government insurance, bailouts, or welfare. No economic regulations. No more paternalism.
If someone loses his money by investing in the wrong stock or picking the wrong bank, then he bears the responsibility for his choices. He cannot expect the government to plunder others to pay for his losses. He cannot expect government to take care of him in any way, including retirement, healthcare, or education.
Replace the coercion that comes with the welfare state and regulated economy with such voluntary principles as individual responsibility, free markets, and private charity.
Finally, let all the malinvestment that has taken place over decades work its way out of the system with bankruptcies, insolvencies, or mergers.
Alas, the American people are not there yet. Hope springs eternal and they’re still hoping for the perfect socialist plan or intervention. They’re still thinking that their beloved politicians and bureaucrats are looking out for them, much as a child continues to look to his parents to take care of him no matter how abusive they are.
Maybe — just maybe — as the American people discover what this new round of socialism and interventionism is going to cost them (on top of Iraq and Afghanistan and the domestic welfare state), a sufficient number of them will achieve the breakthrough that we libertarians have achieved and will help us restore genuine free-market, libertarian principles to our nation.