April, 2008
The New Robber Barons
Matt Mitchell
The hypocrisy and destructive power of deficit spending and central economic planning
Debt is the slavery of the free.
--Publilius Syrus
Nothing could illustrate the bizarre and inexcusably cruel nature of our current economic state, and the system that created it, than Congress and the Federal Reserve’s response to the mortgage lending crisis. This month, tens of thousands more Americans will find themselves without a home due to their failure to keep up with their interest payments. Meanwhile, the banks and credit lenders, who irresponsibly sold these people loans they could never pay back, will be first in line to receive bailouts from the Federal Reserve. Bear Stearns, whose stocks dropped from over $170 per share to less than $2 per share, earned a $30 billion recovery loan from the Fed, while working Americans struggle to find apartments, fight repossession and search for reasons to live in spite of their newfound homelessness.
The populists will point to these bailouts as proof of the free market harming working Americans and a demonstration that more government regulation of business is necessary to prevent another economic crisis from devastating the working and middle class. However, such hysterics always tend to neglect the root cause of “bubbles” in economic markets in favor of scapegoating various businesses that are not held in high esteem among American voters, such as the petroleum industry, banks and health insurance providers. This comfort in attacking symptoms rather than root causes merely accelerates our departure from sensible economic policy and sends us further down the road of destructive central planning.
The first step to breaking this cycle of economic mismanagement and ethically challenged business practices is to put an end to the quasi-fascist dependency American corporations and banks place in our government and in the Fed. Washington has allowed businesses to manipulate our money supply, prohibit free entry into new markets and maximize profit potential while eliminating risk for themselves. No one will dispute the fact that centralized planning is not without benefits for whom such planning is designed; our economy has grown a good deal since the birth of the Fed, the end of hard money and the free trade agreement craze. But the consequences for that planning have an equally indisputable impact on working Americans as income inequality soars, real wages stagnate below the real rate of inflation and potential for upward social mobility diminishes. And thus, today we find ourselves subjects of a national government enslaved to its own debts; today our government owes over $9 trillion dollars in debt to various lenders, or just over $30,000 for every man, woman and child in America. Combine this with over $45 trillion in unpaid commitments to Social Security, Medicare and Medicaid. Within forty years, 100 percent of all government revenues will be dedicated to payment of those benefits along with interest payments on the national debt.
For the good of our future and the welfare of ourselves and our children, we must start now to change the way Washington spends and manages our money. Eliminating debt and stopping deficit spending must become a top priority for Congress before it runs out of money to pay for anything other than entitlements. This means aggressive reforming of not only how Social Security is funded but how funding is given out. It also means allowing opt-out programs for Social Security and Medicare recipients, such as health savings accounts. It also requires the Congress to force better oversight of the Treasury Department and the Fed when they work to manipulate the money supply and put an end to selective bailouts for incompetent businesses.
For far too long our federal government has made it its business to serve as a charity ward for down on their luck corporations. In the process, it has mortgaged our future almost to its breaking point, not unlike the same lenders whose irresponsible business practices are now being rewarded with government checks. It’s time for Washington to perform a charitable act for the American people for once and get its own house in order before it makes this recession any worse than it already has.