Since I write about capitalism and crony capitalism and government and business every day I have the opportunity to read quite a lot about these subjects from various perspectives. I read libertarians, and conservatives, and liberals, and progressives, and just about anyone else who is interesting. I read the comments here at ACC, and at sites all over the web.
One of the things I am fascinated by is the degree to which some people are seriously afraid of free enterprise, the voluntary exchange of goods and services, of capitalism. It is bizarre to me as it seems pretty self evident that where free enterprise is allowed to flourish people also flourish. History has shown us this over and over and over. And yet people still fear.
Is it ignorance? Is it ingrained lessons from school? Is it an overall culture of statism? Is it the search for a religion in a world which often lacks religion? (I am convinced that “big government” is in fact a religion. I will admit this from the outset.)
There are probably dozens if not hundreds of reasons why some people fear free enterprise. Some reasons are more valid than others. I think however that there are some core reasons which can be readily identified and I’d like to take the space to explore some of them.
This essay will be an ongoing one which I will revisit periodically. Below are a few reasons why I believe people fear freedom and free enterprise. This is just the first batch.
Sad but true. A government “shutdown” doesn’t mean anything. The national parks will be closed because they are high profile and people like them. They’ll probably rope off the World War 2 Memorial on the Mall too for the same reason. Other than that? The government doesn’t “shut down.” It never shuts down. It just keeps on spending money.
Well no kidding Mr. Bernanke. What makes you think that? Now?
It should be noted that it is very hard to write campaign checks from prison. That is really frowned upon. Outside of the big house however funds can flow to influence peddlers freely. And Obama made it clear who the bankers owed for their “freedom” when he explained to a group of senior banking executives post-acute crisis that the only thing standing between them and the “pitchforks” was him.
So fellas, just so you know. I’m just trying to help you out. I sure would hate it if the Justice Department had to come sniffing around your firm. That’d be a tragedy.
The message was received. Heck, even Corzine is still running around the Hamptons.
The game in the United States is absolutely rigged toward big business. We have a crony economic system which benefits the connected and the established at the expense of new ideas and growth. If you’re in the club, we’ve got some taxpayer money for you. If not, well, you can apply for admission but chances are you aren’t getting in.
The fundamental problem here is that governments take from taxpayers and give to connected interests at all. In our opinion that is not the proper role for government and we should be working at all levels of government to reduce subsidies. But proper role or not, it’s got to be immensely frustrating as a small business owner to see streams of tax money flowing to your competition year after year while you the little guy are relegated to the margins.
As we’ve said China is driving things economically right now. The Federal Reserve doesn’t want to say it. It wants everyone to think that though our boat is leaking it is unlikely to leak as much as the rest of the the world’s economic “boats.” And right now that may be true. But we are still taking on water. The Great Economic Experiment post 2008 is failing, as many of the more market oriented have long predicted, and now the American central bank has very few options.
Somehow, for many people, the TEA Party has become some sort of social conservative thing. This is the dominant narrative repeated in much of the press and indeed some social conservatives have tried to run with this recharacterization.
But the TEA Party wasn’t and isn’t about social issues. It is about reducing the size of government. It is about bringing the political class in line. It is about We the People saying ENOUGH! And most importantly it is about being TAXED ENOUGH ALREADY. T-E-A.
The good news is the market seems to be shrugging off the relatively bad news. The assumption is that the Federal Reserve is unlikely to raise rates before the end of the year in light of the jobs report. The central bank won’t raise rates because it can’t, though it wants to. (Most people think anyway. Some think the Fed has no intention at all of raising rates anytime soon. They are the small minority though.) As such Wall Street gets to continue enjoying 0% rates. So the Street sees at least a bit of a silver lining (for itself) even if “economists” do not.
The jobs numbers are quite poor but not grim. In light of the Chinese, and increasingly global slowdown the dip in the number is of serious concern however.
There are people who honestly believe that markets are some sort of human construct, that supply and demand aren’t as simple as water flowing downhill. These people have done great damage to our economy and our society over the years. The Obamacare “co-opts” are just the latest example of this kind of magical policy thinking.
Markets are natural phenomena. Ebb and flow. But they can be inconvenient for some who would like to construct a new reality out of whole cloth. Kind of like how gravity is inconvenient for those who would like to be able to jump to the moon.
Zero Interest Rate Policy (ZIRP) is failing for the reasons outlined below.
At least before ZIRP was just failing generally. Now we appear however to be feeling the first acute effects of this grand experiment. And that is not good news.
To turn things around, or at least to begin turning things around, rates have to normalize. Which means likely that rates need to go up.
It happens. It hasn’t for a while. But it happens.
Still, pretty crazy if you think about it.
By Ron Paul
This month marks the seventh anniversary of the bursting of the housing bubble and the subsequent economic meltdown. The mood in Congress following the meltdown resembled the panicked atmosphere that followed the September 11th attacks. As was the case after September 11th, Congress rushed to pass hastily written legislation that, instead of dealing with the real causes of the crisis, simply gave the government more power.
Just as few understood the role our interventionist foreign policy played in the September 11th attacks, few in Congress understood that the 2008 meltdown was caused by the Federal Reserve and Congress, not by unregulated capitalism. Not surprising to anyone familiar with economic history, the story of the 2008 meltdown starts with the bursting of the Fed-created tech bubble.
Following the collapse of the tech bubble, the Fed began aggressively pumping money into the economy. This money flooded into the housing market, creating the housing bubble. The Bush Administration and the Republican Congress also added fuel to the housing bubble. These so-called “free-market” conservatives expanded federal housing programs in hopes of creating an “ownership society.”
If Congress understood the Austrian theory of the business cycle, it would have allowed the recession that followed the housing bubble’s inevitable collapse to run its course. Recessions are the economy’s way of eliminating the distortions caused by the Federal Reserve. Attempts by Congress and the Fed to end a recession via inflation and government spending will only lead to future, and more severe, economic downturns.
We wouldn’t put it past him. Indeed you can bet that long time “friends” like Boeing are leaning pretty hard on The Tanned One to make sure the Export-Import Bank, Boeing’s Bank, the taxpayer underwritten boondoggle for a few massive corporations, is revived from the grave for instance. The people who want Ex-Im gone are the same people who wanted Boehner gone. As such watch Boehner do the wrong thing here, either for old “friends,” out of spite, or both. He’s got one last chance to come through for the cronies and to thumb his nose at those who want a smaller government.
We’ll see how the rest of the day pans out. At this moment we’ve got an hour and a quarter to go. But medium term sentiment on Wall Street appears to be be shifting as we see yet another day of broad selling.
It’s been a weird ride since midsummer. Mostly down but with a few big pops up. The Dow is off 2000 points or so from its high. People are starting to look around with a little more adrenaline in thier veins. Is this it? Have we run out of gas? Are the predictions of the Fed critics coming true?
Again, we’ll see.
People in Washington DC are very concerned with “narratives” and “optics.” Such things drive the place in many respects.(Second only to money, and the 2 are entwined.) How do people think about stories? How do stories look in the eyes of the public. Spin. Bull. Propaganda.
Propaganda. It’s on the rise in this country, though it is not a new phenomenon. But now, the Obama administration is positioning psychologists and behavioral economists in government agencies in an effort to “nudge” the American public toward policies of which the administration – and the larger government apparatus approve. This is a new level of propaganda, more subtle. Potentially, much more dangerous.
We wish Ms. Yellen the best. I heard a recount of this moment on Bloomberg Radio and the word “excruciating” was used. And it is to watch. She falls silent for more than 20 seconds. To her great credit Ms. Yellen got through it. It must have been a very difficult moment.
But this is of concern. Yellen is the arguably the second most powerful person in the world and we are in a particularly sensitive time economically.