Would-be saints unleashing chaos and destruction


When government meddles in the economy

I think I first ran across the word "merchantilsim" in The American Zone, the so-so sequel to the excellent The Probability Broach by L. Neil Smith. The Wall Street Journal calls it "crony capitalism." Whatever it's called, a government extends special privileges and protections to a private company. Usually this allows those companies to outperform their competition, but only by distorting market values and shifting costs to the taxpayers. In the case of Fannie Mae and Freddie Mac, it's even worse because two companies are also owned by the Federal government.

One major progressive rallying cry is "good intentions matter," even more than results. That alone justifies most government intervention. While it's usually blamed on the Republicans, the Democrat Party does more than it's fair share. Don't be fooled by the justification. Left to itself, the free market is perfectly capable of finding ways for people to finance purchases. People aren't "entitled" (pun intended) to a house anymore than they are entitled to their own 767 or NFL team. Underwriting purchases when someone can't afford the price is just asking them to default.

Not so long ago, there was Enron, a company that depended on constant Federal intervention in energy markets to maintain a pseudo-profit. When the Bush Administration withdrew that support, the company collapsed. While some have blamed Enron's collapse on laissez-faire economics and the failure of the free market, it's worth pointing out that it was only when Enron had to compete that it's weakness showed. That's the big advantage of competition, companies either get better or they fail.

It doesn't matter if it's huge multinational companies or New York City taxi medallions, merchantilsim undercuts the free market. This means higher prices and less choice. So remember when it's "too big to fail," that really means that the government has warped the market.

It's your money that they are wasting. Don't you think you should demand it back?

— NeoWayland

Posted: Sat - July 26, 2008 at 02:05 PM  Tag


 ◊  ◊   ◊  ◊ 

Random selections from NeoWayland's library


Pagan Vigil "Because LIBERTY demands more than just black or white"
© 2005 - 2009 All Rights Reserved