Published in The Tennessean, December 28, 2008
Government hand is harmful
by Richard J. Grant, Ph.D.
Civilization advances with people learning to achieve more with less work. For any item that we now purchase, we spend less time working to earn it than our parents and grandparents did.
Our economic advancement necessarily meant changing how we did things. But it did not require us to change our values, the essentials of respect for people and their property. Not even when the going got tough. Why now is our government telling us to reverse that — to change our values and to keep doing the same jobs we did before?
When they tell us that "markets don't work anymore," they are telling us that we need government to tell us what to do. They are telling us that they know better than we do what to do with our property. They will take our property from us to "create jobs," create work for us.
Past promises unfulfilled
Do you believe them? Did the government invent cars? Did the government invent health care, or banking, or money? No; and if we had waited for them to do so, we would still be waiting. We gave the government a monopoly over our money. Result? Inflationary booms followed by busts. We let them regulate and even partake in banking. Result? A false sense of security, thoughtless lending and distorted financial markets. We let them regulate and pay for health care. Result? Government is now the biggest spender on medical services; it decides who can and cannot offer those services, and has created regulatory hurdles that hamper progress and drive up costs.
What does an auto-industry bailout imply? We will pay higher taxes to pay the interest on our exploding national debt in order to pay politically favored people to produce products that we chose not to pay for privately. In other words, we will be reversing economic history — we will be getting less for more.
Bailouts drain resources
Bailing out one industry drains resources from all others. We are less able to move our resources into new and better ways of doing things. As government involvement in our lives grows, we carry a heavier burden.
We are better off than our grandparents, but not nearly as well off as we could have been.
Whenever the government tries to give people something for nothing, whether by promoting subprime loans or by pumping up the money supply, the seeds of the next crisis are being sown. Market signals are distorted; mistakes are made. But the great virtue of private property and market freedom is that people will discover and act to correct mistakes and to preserve wealth.
Markets work. But some people can't handle that truth. They beg government to bail them out, and in so doing they put us all at risk.
By delaying necessary liquidations, they weaken our ability to take care of ourselves and those around us.
Did government invent charity? No; an entitlement mentality is the exact opposite.
Is $1 trillion too much for government bailouts? Yes, $1 is too much.
Richard J. Grant is professor of finance and economics at Lipscomb University.
Copyright © Richard J Grant 2008, 2009