Bear Stearns Bail Out
Writing by abuhatem on Sunday, 16 of March , 2008 at 11:38 am
I have been upset for the past few days over this really stupid move by the Federal Reserve to bail out Bear Stearns bank because it was about to fall. In doing so the Fed cited powers allocated to it during the Great Depression which it has not really used much in the past century.
I think commodity investor Jim Rogers said it best. This is not a market economy, thats socialism for the rich. “Socialism for the rich” was actually a phrase used by economist Thomas Sowell, and others, concerning the general system of corprotism or when there exist industrial complexes between big government and big business.
One of the reasons the ignorant masses denounce the market economy is their claim that “the rich get richer” and “exploit” the poor masses. This is not truly the case in a market economy, this is the case in corpritism. If Bear Stearns was allowed to fall, people would see this was not the case. The success or failure of any enterprise under the market economy is in regard to whether the people want the goods offered or not.
I don’t agree with bailing out people who’s homes are getting forclosed the same way I don’t agree with bailing out big corporations or giving them special privileges. The essence of limited government is that the government does not have the power to give the rich or poor special privileges - even if a democratic majority wants them. No matter how many people vote for something or lobby for it, it is unjust for us to transgress people’s natural rights. And this is the essence of the market economy.
George Stigler, the late economist, called this “capture” in his great work The Economic Theory of Regulation - the fact that different interest groups are led to trying to get special treatment and rules to help them survive. As Milton Friedman proved in Capitalism and Freedom, no monopoly would truly exist if it were not for big government. James Buchanan also did work on this in the “public choice theory” of economics.
If conservatives truly want to show others that the market economy is the truly compassionate system they will not just oppose welfare programs to the poor or socialized medicine, but also corporate welfare and corpritism - no-bid contracts, special regulations, bail-outs, and the military-industrial and medical-industrial complexes.
Bear Stearns should have been left to fall and fail fairly. Secretary Paulson was on Fox News Sunday and This Week this morning and he was giving ridiculous justifications for this. He could not explain why he opposed bailing out homeowners while still bailing out Bear Stearns. “We want the economy to run well,” was the essence of his argument. That is ridiculous, a true moral economy is based on respect of the rights of everyone, and fairness.
Category: Uncategorized
- Add this post to
- Del.icio.us -
- Meneame -
- Digg
No comments yet.
