23 February 2009
Are we becoming fascists?
We aren't really socialists because, despite Maxine Waters desires*, the government isn't going to take over the means of production.
But the government is going into partnerships. And government partnerships with specific firms distorts the marketplace more than any tax or mere regulation could and is, perhaps, only a little tiny step above the bottom-rung of socialism on the ladder of Really Bad Ideas.
Let's consider Citigroup. A company that didn't have enough money to survive the recent credit crunch and deemed too big to fail by our legislative overlords crawling about Washington. Citi received bail-out money in order to, you know, survive. And thankfully it was able to continue its investment in the Rose Bowl, because sponsoring football games is also just too important not to happen in this day and age.
The market system is kept strong by the introduction of new players. New players bring about the "creative destruction" that Joseph Schumpeter wrote about and that we all take for granted. Think about it this way: Clover and Sears used to be the big stores where most of anything a household would want, they could get. Sears has fallen off in recent years and Clover is no more. K*Mart became a major force in retailing, but a little shine is off its luster, too. Wal*Mart is the 700# gorilla, and many people may not like that for myriad reasons, but generally, that is good for consumers. What is better for consumers are the thousands of small stores that exist across the country (& online) that hope to knock Wal*Mart off its perch.
Thinking it can't happen doesn't make sense. Orwell wrote that people tend to think the way things are now, that's the way they're going to continue. He was writing of political culture, but it holds for business as well. Sixty or seventy years ago, many people probably couldn't image a world without Woolworth's. There is no reason to think that Wal*Mart may not be around in 2075.
But the government shouldn't do a damn thing to make it stick around or to go away, especially since it holds the police power.
Back to new players. The US government now has a vested interest in the success of Citigroup, GM, Chrysler and so many others. When the need arises for better regulation, as it always seems to, to whose benefit do you think these new regulations will fall?
The new guy on the block trying to take the market-share of Citi? Or to Citi, which is 40% owned by Uncle Sam?
Government interest in and working with private industry, and the co-ordination of government & private resources which is a natural outgrowth of this cooperation, is bad for business and really bad for liberty. QED one would hope.
Now I don't think Obama is a fascist dictator and I think calling Bush one was also silly and misguided. And the lack of central control in the body of one person is what is keeping us from becoming a truly fascist state. But our legislators now have significant corporate interests outside of their constituencies, and I would think most people would see what a bad idea that is, as well.
Are we all fascists? No, I don't think so.
But we're closer today than we've been in a while. And I don't like it.
*=I wish I could find just a cut of Maxine Waters saying her idiotic, socialistic Maxine Waters things without the editing of the geniuses on youtube. This one was such a monumental brain cramp that no editorializing was necessary.
19 February 2009
07 February 2009
Congress will consider legislation to extend some of the curbs on executive pay that now apply only to those banks receiving federal assistance, House Financial Services Committee Chairman Barney Frank said.
“There’s deeply rooted anger on the part of the average American,” the Massachusetts Democrat said at a Washington news conference today.
He said the compensation restrictions would apply to all financial institutions and might be extended to include all U.S. companies.
Now I think anyone getting paid $35 million dollars for running a company into the ground is just as stupid as the next guy, but it doesn't affect me. And it doesn't affect you.
Yes, a small argument could be made that these wages could probably be better served being disbursed to the shareholders or among many employees instead of one bad one, but that is for the directors (and, by proxy, the shareholders) of the company to decide. Not me, not you, and certainly not the federal government.
As to those companies that managed their finances poorly and foolishly accepted federal money, the government has every right to attach strings. If theses companies are going to be allowed only to pay their chief executives what the president earns or less, a pox on them and their grubby hands for making Faustian bargains.
Wage and price controls are always a bad idea. Decisions cannot be made by central planning. Information is just as scarce a resource as any other and bad decisions by corporate boards are much easier to take than federal control of pay scales. Also there's that minor issue of personal liberty and the government having no authority whatsoever to implement such a bad idea.