|Lead me to the tax trough|
The collapse of Socialism provided an
opportunity for the Left
to sort the men from boys. The Leftists had to make a call, declare Socialism a
dead, unworkable and discredited ideology, or to become slimy
crypto-socialists, and try to introduce socialism through the backdoor via
'wars on poverty', 'third ways', or climate change initiatives.
Laying the boot into crypto-socialists over these issues has been fun over
the last decade, but now the shoe might be on the other foot, and the Right
might be in for a good kick up the derivatives, as the US financial market
apparently faces its worst financial crisis since the Great Depression.
Banks are collapsing, confidence is collapsing, money supply is vanishing.
And capitalism has been rocked to it's foundations! Babies will starve! The
dead shall walk the earth! And we will all be forced to watch reruns of Melrose
Place! Only the Government is big enough, powerful enough and wise enough to
save us from this crisis!
Well, maybe. For the ordinary conservative in the street, it's a bit hard
to see the crisis.
There are cries of 'banks are collapsing!' But exactly why a bunch of of
merchant bankers losing a few or their millions (or even all of them) could be
regarded as a 'crisis' is a bit of a mystery. Easy come, easy go. Doubtless the
average sub-prime banker will be back to enjoying his weekends on his yacht and
mistress shortly after getting out of prison and starting up a new derivatives
There are cries of 'people's superannuation assets will fall!' Well, that
may be true, but looking at the unsustainable growth in superannuation over the
last few years, did anyone think that a correction was not on the way?
There are cries of 'but people will lose their houses!' Apparently those
people who lied about their income levels, and lied about their existing debt
levels, and who consequently can't afford to pay mortgages for homes they could
never realistically afford have some kind of divine right to continue to use
other people's capital to do so. Here in Australia at least, there
were no shortage of scaremongers talking about 'what if interest rates go
up'. In fact Little Johnny was doing that right through his last two terms
in office. Hands up who didn't know about 17% interest rates under the previous
Labour government. Hands up who didn't think that interest rates could ever
rise. Okay, hands down liars and idiots.
There are cries of 'house prices may fall!' But exactly why affordable
housing would be such a bad thing would surely be a mystery to those who would
like to enter the housing market. It might even be a mystery to the many
renters who have to compete for rental properties at unprecedented levels. Of
course for the middle class baby boomers who already have houses it might be a
blow the ego. Bragging about how much your family home is worth is a favorite
past-time at the suburban barbecue, and that might have to be replaced with
.. um .. conversation?
Thankfully of course, the government (as usual) has a solution to the
problem: an intervention. Yes, dear reader, yet another intervention. And as
usual it involves
Does this sound familiar?
- a bigger more powerful government, imposing greater regulations on what people can and can't do;
- spending a truckload of your hard-earned money; and offers
- no guarantee of success.
The US taxpayer is being forced to invest 700 billion dollars into cash for
trash assets and, ever anxious to emulate his US superiors, Kevin (Pixie) Rudd
is going to force the Australian taxpayer to invest 4 billion on his pet
Of course the government interventionalists are in good company here. There
are many educated, intelligent and well-off
individuals who claim it is our last best hope for prosperity. The market, they claim, has
failed. The government must intervene. Industries must be
nationalized. Corporate welfare must be given out. And the taxpayer must
pay. And pay. And pay.
And there are others who point out that this is not a failure of the market. It is merely part
of the market. There are many people who made bad decisions.
- People made bad decisions to buy houses they could not afford
- People made bad decisions to lie about their finances in order to borrow money they couldn't repay
- People made bad decisions to lend those people money
- People made bad decisions to lend the money to the people who lent money to other people, ad infinitum.
- People made bad decisions to invest in institutions which were lending money to these people.
- These people will be poorer as a result of that decision.
Sounds pretty much like creative destruction at work - something the free
market is pretty good at. People who make bad financial decisions lose their
money (they end up being 'poor'). People who make good
financial decisions make money (they end up being 'rich'). Rapidly plummeting
share prices are an opportunity. Undervalued assets are an opportunity for people to
But of course, governments must be seen to be doing something - anything,
because we all know that making this worse is better than doing nothing.
It's time for the true free marketeers to come out of the woodwork. All the
free-market-real-men who believe that the free market will do its thing and
recover over time, versus all the choir-boys who want to panic and push the
'Daddy save me' button and bring the forces of government
crashing down on the last bastion of free enterprise and capitalism. It's time
to separate the men from the boys.
Separating the men from the boys is usually a pretty good thing. It's just
that sometimes you have to use a crowbar. Or at least the blunt instrument of government intervention.