Normally, I don’t mind someone making themselves look silly. The entertainment value is high and I’m on a budget so I find my entertainment where I can.
But when someone both looks silly and tries to drag me into the entertainment by association, if I have the time I’m generally disposed to comment. Which brings me to Russ McBee’s post ‘Slapped by the Invisible Hand’ wherein he blames Libertarians for the SubPrime crisis and the resultant problems. While not a Libertarian, I am a Free Market guy. From my perspective, Russ doesn’t understand how we got into the mess in the first place nor has he a clue as to how we’re getting out. As a result, like most Liberals, he is incapable of preventing it from happening again.
Per McBee, the subprime housing crisis is entirely the fault of Alan Greenspan, Ayn Rand and anyone else tarred with a Libertarian brush, even lightly. Ditto the failure of Bear Stearns, Lehman Brothers, Merrill Lynch and Countrywide. It would appear McBee believes adherence to Free Market Economics automatically results in the worst possible human behavior from others. People don’t choose their behavior. The mere proximity of a Libertarian means bad economic choices.
But Libertarians and Free Marketers are brutally Darwinian economically. They believe businesses behave in their own best interest and won’t willingly destroy geese laying big, golden eggs. For instance, they will take less profit over 50 years and remain viable as opposed to going for huge profits for 5 years to then collapse. Such was the case with the vast majority of businesses which did not speculate in subprime paper, or, if they did, did so in a properly balanced portfolio. Libertarians and Free Marketers look to self interest to regulate the market.
That’s not ignorant or unrealistic as Russ surmises. Free Marketers understand all too well that despite the warnings, the data and historical precedent which counsel otherwise, some businesses think they can ignore proven Market wisdom and get away with it. They can even point to the odd exception proving the rule. They abandon self interest for self destruction. They abandon sound fiscal rules and practices; it catches up with them; they pay the price. Well, they did until recently. More on that in a moment.
Free Market, Libertarian self interest is simple. Don’t spit into the wind! Bad things will happen if you do. It should be obvious to McBee, but isn’t, that that is exactly what happened to Countrywide and others. The market self policed and self corrected. In a serious manner. Total destruction would seem a fairly high price to pay, but pay it they did. I’d say the Market did an excellent job of teaching, training, warning and finally policing itself. And I’d be correct.
Except the Market hasn’t been allowed to work it’s magic for years. It won’t correct the bad behavior everyone, McBee and me included, doesn’t like because when business screws up, Government rides in like a White Knight to save the day. Such White Knights used to be other businesses who played by the rules and now snapped up the competition at bargain prices. Today Government bureaucrats sweep in to position cushy, white pillows so a fall from grace is as soft and painless as possible.
McBee evidently sees this as a good thing. He says
How telling it is that the abject failure of the bankrupt and corrupt libertarian mindset requires what amounts to socialism to bail it out when its superficial, simplistic, and naive world view inevitably collapses.
Excuse me? The Market is working exactly as the “libertarian mindset” wants it to. It does not desire or require Socialism to bail it out. In fact, Libertarian thought isn’t being bailed out at all, it is being proven correct. The only “superficial, simplistic and naive world view” is the one saying you can remove consequences from bad behavior and trust you won’t get more bad behavior! When the Market punishes it’s economic apostates, the next guy thinks twice. He sees the smoldering wreckage of CountryWide and Lehman Brothers and pauses to consider a different course of action. The system, if allowed to, will work just like Libertarians and Free Marketers say it will.
Socialism is the option which needs bailing out. Championing a few people experiencing pain from a few business failures, Socialism practically guarantees far worse pain for far more people when their meddling causes an Economy to fail. There is a reason for the non-existence of even a single long-term Socialist success anywhere in the world. Government started bailing out a few failed businesses years ago. Today, more and more failures need bailing out and at higher and higher costs. You get more of what you pay for. Yet another Economic reality Libertarians and Free Marketers understand that Socialists don’t. Properly dealing with painful realities now prevents future pain of greater intensity and scope. McBee would have us abandon responsibility to chase the Socialist dragon, numbing ourselves with the opiate of Government largesse until the entire house of cards comes tumbling down.
Trading proven, Free Market, Libertarian wisdom and experience for Socialist, pie-in-the-sky, Kumbaya, hand holding is precisely the sort of change Russ McBee, Democrats and Barack Obama want for our country. My response is one gaining daily popularity with Americans: “No thanks, Obama – Keep the Change!”
PS: By the way, I didn’t forget the examples of Fannie Mae, Freddie Mac or AIG. I ignored them as they’re irrelevant here. I guess Russ doesn’t understand Fannie and Freddie are failed Government programs, not Private sector efforts. Libertarians and Free Marketers would never have allowed the Government into the Market like that. That’s what Socialists are for. AIG is an insurance company still sorting out the factors behind its failure. While the subprime market may have played a part, so did the insurance industry losses in the wake of 9/11, Katrina and other large disasters. Including these in efforts to pile on Libertarians is either ignorant or disingenuous. Either way Russ loses …