Tuesday, September 16, 2008
Central Planning Fails Again -- This Time, It's Us and Our Financial Markets
I'm not sure who is the bigger idiot when it comes to the economy. McCain? "right now we are the victim of greed, excess and corruption in Wall Street." No, we are the victim of government regulations that allow companies to profit from their good decisions, but find themselves in no danger if they make bad decisions, as the government is there, promising to bail them out. Profits have been privatized, but losses remain in the public sector. Is it any wonder our financial institutions are collapsing? What kind of decisions would you make if you knew all your bad decisions would have no consequences for you, but that if what you wanted to do worked out, you got to keep the profits? I bet you would be willing to do all sorts of risky things -- or downright idiotic ones. And then there is Joe Biden saying what all this means is that we need more regulations. The same group of people who couldn't figure out how to "privatize" companies like Fannie Mae and Freddie Mac without creating a situation where they would certainly collapse want to regulate companies even more. The lesson here is not that we need more government, but that the involvement of government in these companies that have been collapsing is what caused the collapse. Government control in the economy in the U.S. was about 30 years behind that of the Soviet Union. It looks like our collapse is right on time.