Sunday, October 18, 2009

A Letter to Bail Out the People

I'm doing a video project on the subject of police brutality & why we should be far more concerned about the government than any instances of citizen-induced violence. As I was searching for some more images and media to incorporate, I ran across a website sort of tailor-made for the G20 protesters.

Unfortunately, like so many others, including my roommate's father last night (and my own father for that matter), they have confused the ideas of laissez-faire, free market Capitalism with State Capitalism or Corporatism.

The organization is ultimately rather economically confused at any rate, considering they are rejecting corporate bailouts, but yet not the idea of bailouts in general, which they think should just have gone to "job creation", which mystically happens without funneling through existing corporations because they were advocating one of the great depression-prolongation techniques of FDR: the Works Progress Administration.

So I wrote them a letter... Here it is:


While I agree with some of your positions, I wanted to express my dismay at seeing the conflation of completely different ideologies as well as the dismally poor understanding of basic economics displayed by your organization.

Firstly, "Capitalism" is not the system of economy employed in the United States. We have what is commonly referred to as a "mixed economy", or more aptly described as Corporatism. Laissez-faire, "free-market" Capitalism should not be a term used to describe the current state of the United States *ever* as it has not even partially existed in this country for 100 years.

In a laissez-faire economy, NO COMPANY would be getting tax-payer funded bailouts of any kind, nor would something as entirely crucial to the market as interest rates be set arbitrarily by a government backed entity such as the Federal Reserve.

In fact, if your goal is to oppose corporate bailouts, you will find many friends among the myriad free-market economists at the Ludwig von Mises Institute (who's numbers include Peter Schiff & Mark Thornton, among many others in that camp who accurately predicted & warned of the housing bubble as early as 2002 when then Fed Chairman Greenspan was busy lowering interest rates & printing money exactly as we are doing today). You will also find many friends among other free market groups such as the CATO institute, who produced & printed the following: - warning against the bailouts and so-called "stimulus" packages.

It upsets me to see free market capitalism & corporatism conflated as they are fundamentally oppositional concepts, and because it obscures the reality that government intervention in the market always results in negative and often severe consequences, whereas allowing individuals the freedom that is their birthright as Americans to own property, trade with each other and pursue happiness in the ways that they deem best is a beautiful thing. Confusing the two is unacceptable.

Secondly, I wish to point out that redirecting "stimulus" spending at WPA-like job projects will have absolutely no different a net effect on the economy than giving all that money directly to AIG. For the government to hand out money to anyone, it first must take it from someone else by force. What's worse, for every dollar the government spends, economist Robert Barro points out that the actual "multiplier" is 0.8 - meaning each dollar spent by government results in a net loss in value by 20%.

This is NOT the way to prosperity.

Additionally, invoking Martin Luthor King as someone who dreamed of a world where everyone had a government-guaranteed job is misreading his message of liberty in the extreme. Dr. King envisioned a world not where people engage in a never-ending game of using government to steal money from Group A to give to Group B - which is exactly what you're talking about when you "demand" that jobs be provided regardless of utility and upon pain of jail - but rather that every INDIVIDUAL should have the right to participate and pursue their own success, based on the content of their character and the merits of their abilities - rather than being kept out of the market by the racist laws in place in the 60s.

King's message was freedom and equality under the law, and absolutely NOT a demand of handouts or special treatment. It seems insulting to his memory that you would invoke his name in a way so contrary to the message of freedom.

Lastly, I must touch on the economic reality, which is simply not possible to avoid with legislation. The mess we're in now is precisely because politicians & their willing accomplices do not understand this simple fact. There are clear reasons the jobs are currently unavailable to much of the United States population, and unfortunately, this cannot be fixed until we recognize the problems intrinsic to allowing government to set interest rates, and to use the hard earned income of American citizens to pick winners & losers and grant political favors to large corporations. As long as the power structure exists, the major players will always find a way to use it to their advantage. And that's exactly what we're seeing. Goldman Sachs just had a hugely profitable quarter on the taxpayer dime; especially impressive given the fact that they likely would have been liquidated and bought by smarter, more savvy competitors who were not overleveraged and who protected their business better during the boom were it not for the special favors of government. It should come as no surprise then, that Goldman Sachs was President Obama's 2nd highest individual campaign contributor.

It is no coincidence that regardless of the anti-corporate rhetoric, large corporations will always have an advantage as long as there is power to be bought & sold.

Conversely, if your organization were to support true reduction of concentrated power across the board; lower taxes for everyone, no bailouts, no borrowing & spending far beyond our national means, no picking winners & losers in the market and perhaps most importantly, no more allowing private bankers to control the supply of money & the interest rates of the United States... I can assure you that more jobs would be available, and there would be less power concentrated in the hands established big-business and thus substantially decreasing their ability to protect their own interests by using the law, zoning, taxation and other means to destroy their potential competitors.

With that in mind, I wish you the best of luck in the fight against corporate bailouts. Keep it up! But please, if you could refrain from using the term "capitalism" in any situation where you actually mean "corporatism", I would greatly appreciate it.

Yours in Liberty,
Sean W. Malone

The next video project I do will be on Corporatism vs. Capitalism. It's time for people to stop and wake up to the reality that when we were all taught of the "mixed economy" in grade school, we can't turn around and pretend it's all "free market" now.

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