Friday, September 26, 2008

THE FALLACY OF A GOVERNMENT BAIL OUT OF WALL STREET

Other than the fact that no government in the history of the world has pulled off a bail out as planned by the federal government to rescue Wall Street, this plan has no chance of success. The proposition is to spend $700 billion to conduct the rescue operation with the possibility of showing a profit from the operation of a trillion or two.

A profit will not be the end product of this scheme.

What will happen is that the CEO’s and board chairmen of those financial institutions that have failed will get their usual multi-million dollar bonuses and Wall Street will be happy. For that is the nature of government: reward failure at the expense of hard working taxpayers in the general public.

If we allow the Free Market to conduct the “rescue operation,” the country will survive the impact. There will be no bonuses. The Free Market makes no such payments. Bad decisions are not rewarded with financial remuneration by the Free Market There will be no failed businesses. Such businesses cease to exist in the Free Market.

The rationale for the federal government bail out is “we can’t afford to do nothing.” This is an interesting statement. It is tantamount to saying that unless something is being done by the government, then nothing is being done. That is the rap the free market gets in dealing with the economy: “nothing is being done.”

The fact of the matter is that if the federal government stays out of it (does nothing) like it should, the Free Market will handle the situation. And the Free Market will handle it like it should be handled. It will reward beneficial accomplishments and penalize detrimental failures.

The Free Market faces a tremendous handicap to Socialism: It operates unseen. Imagine a circuit board with billions of terminals, each terminal exchanging energy on its own volition with any other terminal on the board. What makes it even more difficult to observe is that, unlike a circuit board where the terminals are stationary, the terminals of the free market move around and change their polarity and what they put on the circuit. It becomes an invisible haze of activity.

But it provides.

Ten million people in New York City are fed every day. The reserve of fresh food in the city is probably no more than a week’s worth. Winter storms, summer heat, spring floods occur, but no one starves. Who are the suppliers? Who gets the food to where it must go to feed hungry humans, every day, three or more times a day? In just the right amount? Who sets it up so those who make the deliveries get it to the right place, on time, and then get paid for their troubles?

No one knows. There is no plan. It just gets done.

Socialism however is very observable. The terminals are easily located. The individual in the government operating from whatever bureaucratic department never changes. If the individual moves, the department does not. Another individual is hired to replace that individual and the circuit board remains stable. Cause and effect are easily predicted, spotted and followed. It all makes sense.

The problem with socialism is that it doesn’t work. It is a continuous function of malfunctions.

The Free Market works. The only problem with the Free Market is that it can’t be seen or predicted, other than that it will handle any failure and present a solution for the request.

When the federal government raises the $700 billion to rescue Wall Street we will be able to follow the money, know where it came from and to whom it goes. We will know which bureaucrat spent it and where and which bank or other financial institution received it and how it was used.

Some of it will be hidden, but only because those giving or receiving the money want it hidden for various nefarious reasons.

In the end the plan will fail. Because socialism always fails. Because such government programs have always failed. The average loss will be $2300 for every one of the 305 million men, women and children living in this United States of America.

But if the government stays out of it, and the free market is allowed to work its unseen magic, it will succeed. Those millions of men, women and children will each take a hand in it. They will adjust their habits to handle the financial danger as it is presented to each of them. They will deal with it one dollar, ten dollars, ten thousand dollars, a hundred thousand or a hundred million dollars at a time, depending on each individual’s financial capacity and the impact the failure has upon each of them. For each individual to some degree of action or inaction has been a contributor to this financial condition.

So each individual to that degree must adjust their financial activities, be more frugal, choose more carefully how that which one has is used. Certainly work will become more revered, and making money by making money (no work) will lose some of its allure. The sweet song of Socialism, that someone else will pay for it or take care of it, will not be listened to so willingly.

Yes each of us must change our habits and routines a little bit at least; a lot if we have listened to that song too much. For the free market is a harsh master. It gives life to success; death to failure. But unlike socialism, where only the super powerful are allowed to survive, the free market lets anyone who is willing to put in an honest day’s work every working day succeed.

Those who want to do less will be left in the financial dust bin to mull their failure…but will always be given another chance to do it right.

Even those on Wall Street, who have wasted millions of dollars will be given another chance. The free market punishes stupidity but is very forgiving and one always has another chance. Just don’t get lazy.

And don’t put up with bail outs—governmental or otherwise. That’s just a lazy “let the someone else do it” attitude.

Get busy getting busy, and stay that way. And we will all make it and to Hell with the Kingmakers on Wall Street. We really don’t need them.

http://uk.youtube.com/watch?v=ZwLaWc-63HY