In my previous installment of the Baracktile Dysfunction series, I said the following:
I would prefer that the government get out of the picture, and the market can sort things out. When centralized economic systems fail, it is proof that they don’t work. When a capitalistic economic system fails, it is proof that the system is working. When a centralized economic system fails, you end up with an insolvent government unable to provide entitlements to its dependent population (See bankrupt California for an example of the latest failure on socialism’s long list of failures). When a capitalistic system fails, you end up with a new generation of entrepreneurs and innovators who discover how to create wealth again out of the failed assets of previously existing enterprises. This process is painful, but in the long run it is very rewarding.
A debate ensued between myself and Chuckles, where I suggested that in a capitalist economy failing businesses, and yes even failing banks should fail. Competitors will fill in the gaps. To which Chuckles replied:
Lehman, Bear Sterns, and their ilk, there is nobody to step in and fill that void.
Well, I found an interesting article for Chuckles to read: Crisis Reshaping Wall Street.
This is perhaps my favorite passage:
“We have the opportunity to step into the shoes of a Bear Stearns or a Lehman,” said Lee Fensterstock, the chief executive of Broadpoint, a Manhattan firm that has hired more than 240 people since fall 2007, when the financial crisis started taking root. “We would never have been able to do this five years ago, but now, it’s as if all of Wall Street got turned upside down, and they shook out all these people.”
The article continues to explain that financial institutions that have taken government money are losing all of their best talent. Of course who would blame them. After the executives at AIG were publicly pilloried, and Congress voted to confiscate their legal earnings, why would you want to work for Obama inc. This is bad news for the taxpayer, because the banks that were bought in our name by two equally stupid presidents will have a hard time correcting their ships without talented crew on board.
If you haven’t read the letter from the AIG executive whose pay was voted away by Congress called, “Dear AIG, I quit!” then you should. I say if Congress really had any balls, they shouldn’t just tell these bankers to commit suicide and take away all of their pay. They should force them to continue working. I propose a 90% punitive tax for five years on the new earnings of an employee who leaves a bank that received government money for a new job. This would be an America that for once we could be proud of. This would be an America that would embody the ideals so carefully enshrined in our constitution. Come on Obama, it is time to take your ideas to their logical end. Force these bankers to do your bidding.
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Very good points! I’m not 100% convinced that allowing the banks to fail, or any other large corporation that employes a great number of workers, is the right way to go. What I am sure about is, we’re greatly devaluing the US dollar by bailing out these banks and other large corporations. We all know that the devaluation of the US dollar is a VERY bad thing. So maybe it is best to just let these irresponsible corporations fail, take our lumps, learn from our mistakes and become stronger. I do feel that we are becomming a weaker nation due to these bailouts.
If there’s one thing I find absolutely adorable it’s a conservative clinging to the notion of “personal responsibility”. It is precious beyond words. I feel like a grandmother resisting the impulse to pinch big chubby, freckley cheeks.
I wish to warmly welcome these intrepid individuals clinging to the notion of “you make your bed, now sleep in it” solidly into the 21st century. But before I do that, I feel like I should welcome you into the 20th century. I do this, because it was the late 19th century that did away with personal responsibility with actuarial sciences. Or let me say this more clearly: the State did not kill personal responsibility, insurance did.
I think I understand the impulse, and feel free to tell me if I get it wrong: “personal responsibility” forces the moral imperative that actions have consequences, and we make better choices when we pay for our mistakes. This idea, while satisfying to the soul, is patently false. 150 years ago we began seeing the ENORMOUS efficiency gains brought about by risk assessment and insurance. Our society is where it is today because of it. To reverse this now, after a century and a half, would be cutting off our face to spite our nose. There would be nothing left.
We do not live on the Oregon Trail, friends. We all pay into systems based on systematic risk of us costing the system. You don’t drive down the street, bump another car, or a kid, and pay tens or hundreds of thousands of dollars for your lack of caution. You pay your insurance premium, your deductible, and the actuary reassess your risk, and you pay a new rate, or you are excused from the system (when your risk has become too great).
As for the rest of your article about congress having balls? Bread and circus. It was a show for angry Americans to see congress in action. What else could have been done? America didn’t want a reasoned response. It wanted heads to roll. And who believes Obama was really “choking on his own anger” as he said. He didn’t care. But they had to pretend, because the American people were so upset.
I close this with a warning that I hate the little comment box, I have not edited anything I’ve written, and am much too lazy to paste it into Word for editing. Hope it makes some sense, but if it doesn’t, allow me to concisely recap: You don’t understand the economy.
I hope this was clear.
Hope you are well,
Chuckles