"If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace. We ask not your counsels or your arms. Crouch down and lick the hands which feed you. May your chains set lightly upon you, and may posterity forget that you were our countrymen."
-Samuel Adams

the Misanthropic Humanist:


02 December 2008

Bailouts and pain medication

Sometimes the general "wisdom" of the people is astoundingly stupid. I could rail for hours about how dumb the idea of every single bail-out proposal we've heard in the last month is, and I'd still have more material left. The problem is that I consistently can't believe that anybody is really stupid enough to think that they're a good idea. I haven't come across one, not one person in my daily life who thinks that it'll work. A few examples of colossal genius have actually told me that no, they don't think it'll work but yes, they think it's a good idea. Ummm. Well, that's a whole new level of stupid, but at least they're aware that it won't work. Unfortunately these mental masters are at least as smart as our congress and media, and likely smarter. Folks in congress either think it WILL work, or agree that it's a good idea anyway.

Alas, I may be shouting into the hurricane here, (or preaching to the choir... I'm not sure which metaphor is more appropriate. Perhaps peeing into the wind?) but I'm going to go ahead and point out some simple reasons that this is really stupid.

For starters, there's historical precedent. The "Great Society" didn't pull us out of the depression, it prolonged it. If WWII hadn't come about, who knows how long it might have taken to get our economy back. I'd like to think that if it hadn't, it would prove undeniably that socialism and government programs don't work, but socialists and liberals don't respond to facts anyway, so... never mind.

Ignoring historical precedent, let's look at the fact that we're rewarding poor performance. If Detroit is paying millions of people not to work, and can't figure out why they're losing to imports, it's not my responsibility to give them more money through the government. It's the equivalent of just charging twice as much for the cars they're already selling, and it's wrong. Their manufacturing model is obviously inefficient, and supporting inefficiency will NEVER improve an economy. It's simply using manufactured "crisis" as an end-run around government directly paying for the retirement and medical benefits for swaths of people who were obviously guaranteed more compensation than their work was worth.
  • "But don't I deserve a good living wage, retirement, and medical plan for my 30 years of service to the auto industry?" Answer: No. You deserve what the market says your labor is worth, not what your union forced the company to accept. Wanna know why so many American jobs go overseas? Unions.
Incentives. In order to receive this government "bailout" money, do you realize that there is an incentive for me to not pay my bills? Every version of the plan that I've seen for bailing out lenders includes "helping" home-owners to stay in their homes by lowering the interest rates and/or the principal on their homes, but only if they're at least 90 days delinquent on their payments. So what you're telling me is that you're going to take more taxes from me and the "rich" (slowing the economy further), run them through a government agency (losing money along the way), give those taxes to companies that deserve to fail (promoting and extending inefficiency), and then give more to people who don't pay their bills (and aren't going to start), while finally expecting me to go on paying the higher amount... just because? Awesome. That'll fix things.

Crisis. Who, other than the Obama campaign and our media (but I repeat myself), decided that this was a crisis in the first place? It seems to me that this was really only a crisis for some banks. Again, those were the bad banks anyway, so who really cares if they fail? Oh, I'm sure their stock-holders do, but hey stocks are a risk in the first place. If you bet on the wrong horse, too bad. Don't bet if you can't afford to. And don't go telling me about how horrible it is for people to have their houses forclosed on. A bunch of those people were investors, and even if they weren't, so what? Ever heard of apartments!? Besides, the banks will just turn around and sell those houses for less, thereby lowering the costs of housing for whoever now does qualify for a loan. Who knows, maybe it'll be the people paying low taxes who invested in good banks buying cheap houses and renting them back to the same people. Voila! Market forces. But instead it's talked up into a crisis, and markets being what they are, people got scared. Others saw this as an opportunity to get some cash themselves and talked down they're own industry (auto, home-builders, etc) and extended the appearance of crisis. And now it becomes real. Panic sets in, the goverment destroys wealth, and a real crisis arrives.

The whole situation is akin to going to the doctor for an ingrown toe-nail and dying from a morphine overdose. Sure, it was going to hurt a little, but we've skipped local anesthetic for a lethal overdose of pain-killer.