Bailing On Liberty

It is maddening to listen to the many voices weigh in on the current banking “Crisis”.  It’s as if all reason has been abandoned.   Stike that.  Reason has been abandoned.  As the congresscritters writhe and moan like Pfleger and Wright at an Obama concert, it is, perhaps, instructive to “review what we’ve learned”:

1. This wasn’t caused by free markets or Capitalism.  It was caused by decades of government spending.  In particular, it was caused by government spending money it did not have.  It did so explicitly – via deficit spending – and implicitly, by forcing lenders to make bad loans and then promising them they’d be “protected” from the subsequent losses.  This is, after all, what the “Your welfare qualifies as mortgage income” scam was all about.  In other words, the last thing we had here was a “free” market.
2. Once government figured out it could no longer tax its way out of trouble, it retreated to the next ring of hell: it printed money, lots of money.  Well, more precisely, it lowered interest rates.  This devalued the currency, drove oil prices through the roof, and generally had the effect of being inflationary, even though the formal measure of inflation did not reflect this.  This, um, slowed the economy down further.
3. The banks in question do bear some responsibility, notwithstanding the predations of the government upon their lending practices.  In no case are they entitled to your money unless you’d like to donate it as a charity.  Using government to force you bail them out of their own mess is flatly communist … which is probably why Obama is particularly keen for it.  Laying off the risk to the public while retaining the rewards for oneself is the act of a despotic oligarch, hence the neo-cons, con-neo-cons, and just plain con men who support this.
4. This produced the perfect storm for the usual communists like Comrade Obama and oligarchs like McCain and Bush.  They are trying to terrify us into supporting a further violation of our wealth by “fixing” the economy with tax money.  They are wrong and they are profoundly evil for demanding this.  The way to “fix” this problem is to let the banking institutions in question go bankrupt and be reorganized under competent new managers appointed by whoever buys their remains.  Alternately, the banks might want to renegotiate the terms of their mortgages voluntarily with the borrowers.

There is no simple fix here.  Nothing we do will avoid massive pain in the short run.  But, if we allow the scoundrels in government to prop up the failing banks, we will pay for this forever.  Adam Smith’s “invisible hand” will not be held back.  It does not answer to Congress, it does not answer to the Obama communists, it does not answer to the oligarchs.  It answers to Reality – so should we.

Gas Is Still Cheap

I had an interesting conversation with a retired auto mechanic yesterday. He tells me that in the early 1960s gas was around 25 cents per gallon, and a full time mechanic made about $3000 per year.

Today, the US national median income is about $45K or so and gas is around $3.75 nationwide. If you do the math, you realize that we’re paying about the same proportion of our income for gas as our grandparents!

Actually, we are doing better than our grandparents in many ways.  Modern cars get way better gas mileage than the barges of 1960.  This means we spend less to go further.  A modern car is also better in almost every way.  A $20,000 Honda Accord has more and better features than the most expensive 1960 production Cadillac or Mercedes.  It’s more has more gizmos, is more comfortable, and is generally safer than the cars of 40 years ago.

So, when you see the Big Eeeeeeeeeevil Oil companies making lots of money, take a moment and give thanks.  They’re keeping your gas at a more-or-less constant price, decade after decade, AND they’re part of your retirement fund, pension fund, 401K, or other broadly-based investment.  Their success (or failure) is the success or failure of millions upon millions of citizens.  Everyone needs to quit whining about high gas prices and get to work themselves trying to be at least as productive as Exxon/Mobil.

The Wealth Of Numbskulls

Adam Smith published The Wealth Of Nations in 1776, thereby laying the foundation for all modern economics. It stands as co-equal with the American Revolution in defining the modern free state because political and economic liberty are two faces of the same coin.

And … these two forces were phenomenally successful. In less than 300 years, the US experiment produced a global tidal wave of change (for the better) that the previous 9700 or-so years of recorded history could not accomplish. Today pretty much everyone on the planet benefits directly or indirectly from Smith’s foundational ideas about how wealth is produced. Even the most remote and “primitive” cultures benefit from Western wealth, whether via medicine, transportation, communications, or commerce.

But, perhaps this economic success was just a wee bit too successful. The Western beneficiaries of Smith, who enjoy historically unprecedented wealth, seem to have utterly forgotten his lessons. Today, you see, wealth is actually under attack. Attacking wealth is the luxury reserved only for the (relatively) wealthy. It’s no accident that some of the loudest anti-Capitalist voices emminate from the children of wealth. A good part of the 1960s counterculture, for instance, were rich kids going to tony elite schools on daddy’s credit card. This model persists today among the ultra wealthy population of actors, musicians, and drunken scions of political families.

And they’ve had their desired effect. Today, a good part of the general population has been taught to resent the wealth of others and is sure that wealth=dishonesty. They are fully immersed in the intellectual sewage spewed forth by the academy, the “entertainment” community, and even the politicians at large (almost all of whom depend on wealthy donors, but can never admit it out loud).

Nowhere is this more apparent than the incessant drumbeat of hatred directed toward “Big Eeeeeeevil Corporations”. Look Left, look Right – you’ll find some “thought leader” peddling the usual “Corporations Are Bad And Harm The Little Guy” line of toxic waste. But even a slight examination of Reality lays this notion to waste. Consider, for a moment, the richest members of society. Bill Gates has an approximate wealth of $50 Billion – a nice tidy sum. Let’s suppose there are a  hundred like him (there aren’t).  For those of you that suffered at the hands of New Math, that’s a total of $5 Trillion.  Now, suppose our mythic hundred Eeevil Rich Guys pooled their money in order to oppress us Little Guys. Oh wait, the US economy alone cranks out about $13 Trillion every year. At most, our evil cabal can buy up less than a half year’s annual wealth – and that’s just the US, nevermind the Anglosphere, Europe, Asia, India … So, Big Eeeevil Rich People do not, in actual fact, own the bulk of large business.

So… who exactly owns Big Eeeevil Corporations?  We do! We do so via our retirement plans, our investments in mutual funds, our teachers’ pensions, our union pensions, and so forth. In effect, attacking large business interests is an attack on ourselves (aka “The Little Guy”).

In a related vein, we often hear about “overpaid” CEOs. Apparently, we, the owners of their companies don’t think so, because we keep investing in them. BTW, most corporate executives own a vanishingly small percentage of the companies  they run. It would be better if they owned more, because they’d have a greater interest in their company’s performance.  But the Wealth Haters have seen to it that the aforementioned executives don’t get too large a piece of the action by means of foul laws that make stock options harder and harder to grant.

There are dozens of similar examples, but they all boil down to one thing: The failure to understand basic economics coupled with personal greed and class envy has turned our “Wealth Of Nations” into the “Wealth Of Numbskulls”. The Goose That Lays The Golden Eggs can only be plucked so often. Sooner or later, we’re going to get the devastating effects of attacking wealth, the people who produce it, and those who possess it.

Jefferson had it right in his first draft of The Declaration Of Independence. It should say “life, liberty, and property”. Without a respect for wealth, there can never be liberty.