OpEdNews » Lessons Not Learned from the Past Regarding Government Bailouts

I am continually amazed at the numbers of people - even ones who profess to being broadly read in history - who do not recognize this latest financial fiasco in the US as another and expectantly major example of increasing government interference in the marketplace over the past more than 100 years. The major economic consequences now seen have only been repeatedly delayed (but not prevented) by prior government finagling in the economic interactions of individuals (the marketplace), otherwise referred to as "stimulating" or "fine-tuning" the economy. Now, however, the cracks are visible and the chickens are headed for the roost. The government's presence in all phases of the marketplace took a marked increase in the early 1930s when major supposed "rescue" measures by FDR actually deepened and lengthened the economic downturn that resulted from earlier government banking regulations, as I've explained previously.

The most current measures being pushed by politicians to "rescue" the US financial markets are more of the same kind of regulations and "overseeing" that brought this situation about. How do you think the economic "bubble" came into being...?? This happened via government stimulation of the housing markets through the central banks (highly government controlled) and GSEs Fannie and Freddie, and also regulations against many practices that in the past would have eliminated poor risk loanees/mortgagees. (Avoiding claims that "civil rights" are being "violated" when someone is denied a loan has been a goal of many financial institutions to minimize legal involvements.)

So don't expect anything more than additional difficulties from whatever "oversight measures" and additional taxes lie ahead with a government "bail-out" if you own a business, work for someone else, are seeking employment or new business opportunities, care for your children and home, or are retired. Hmmmm...... that pretty much includes everyone but likely those under 16, who these days can't even get (if they bother to search for) a part-time job babysitting, mowing lawns, delivering newspapers and the like due to the government required tax-related paper work for anyone wanting such services.

Pertinent to the entire sub-prime mess that began this latest fiasco, Henry Hazlitt wrote in a subsequent revision of his book, Economics in One Lesson c. 1979, :

I am a professional life-extensionist and liberty promoter who practices what I and husband, Paul Wakfer, encourage. More detail about both of us - philosophically and physically - at http://morelife.org/personal/

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Kitty Antonik WakferI am a professional life-extensionist and liberty promoter who practices what I and husband, Paul Wakfer, encourage. More detail about both of us - philosophically and physically - at http://morelife.org/personal/

When the comment time period has closed at OpEdNews.com, readers are welcome to post their comments/questions at MoreLife Yahoo after meeting the posting requirements of that group, sent to all new members upon joining. All archived messages, however, are available to anyo...

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Without Correct Understanding... More of the Same

I delayed with this response because I'd hoped that OEN management would move the comment by Mark Adams to the original publication of this article as I requested (it had already been submitted to Diggit). Why this copy appeared here 2 days later, is a mystery to me. Since I have had no response from Rob, I am proceeding.]

While reading the details of the House and Senate versions of the Great Bailout is interesting - and I have read them at BBCNews Online (but your inclusion of them< Mark, will be convenient for some OEN readers), they say nothing about the reasons why the mess has come about. What is provided is the latest band-aid for *another* government-caused financial fiasco, albeit both of these currently of mega proportions. A reasoned look at history makes this relationship of government intervention to financial/economic distortions and resulting recessions/depressions clear, as I've shown briefly (and given references for further investigation) - but a reader needs to do that reading and reasoning hirself, rather than think that yet another government fix-up to problems caused by their own previous meddling in a naturally self-ordering system will solve the current problem - and this is irrelevant to the details of the current government bail out. A serious questioning of the system that has brought this about - and the existing system in the US is *not* capitalism but rather has been virtually fascism for over 70 years - is strongly needed by those who properly object to taxpayers being extorted for $700Bn (or any amount). From provided link:

A buyer in one transaction in a free market is also a seller in other transactions - and each individual involved is exchanging to hir own mutual benefit, with the end goal of maximizing hir lifetime happiness, the purpose of each person's life whether or not s/he recognizes that fact. The presence of government in these exchanges is like sand in a finely tuned machine, despite the claims by so many that the market must be "regulated" or it will run amok. It is the government's interference and it's never ending band-aids applied to fix problems that were created in a previous administration (or even the same) that has resulted in all the distortions, both upward and downward.

Without reasoned understanding of the cause for the financial market problems, the understandably upset taxpayers will be lead down the merry path of one version of a government bailout (intervention in the market) or another. Paying out extorted money to the tune of multiples of billions of dollars from taxpayers makes little (if any) difference if it is then doled out to banks (management, investors and depositors) or to individuals who failed to pay their debts and were foreclosed. (These last were *adults *who either did not make or keep modified repayment arrangements with their lender following accumulated debt that had come to exceed their income, or they just decided no longer to pay on houses they could only sell for less than their existing mortgage.) While there are plenty of businesspeople (from all sectors of the economy) who have taken full advantage of all sorts of government subsidies, just as with people who are merely employees, these subsidies/handouts are *all* money extorted from taxpayers. The government is *not* some philanthropist handing out money of hir own (from inheritance, savings, investment and business income) - those handouts to whomever are stolen
funds!

Mark, I think you truly do want a better society, but your approach is without complete understanding of praxeology (the theory of human action - of which the economic part can be found fully detailed in Mises' "Human Action" and a more complete basis for all optimal human action is described by the Theory of Social Meta-Needs). Unfortunately, neither of these are yet taught at the majority of US educational institutions, but rather the various faulty philosophic and economic theories which dominate government actions.

**Kitty Antonik Wakfer

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by Kitty Antonik Wakfer (24 articles, 6 quicklinks, 8 diaries, 136 comments) on Saturday, October 4, 2008 at 8:38:50 AM