It’s time to try capitalism again
I am very troubled about the current state of our economic system. I think we are truly teetering on the brink of a serious recession. If it comes, it will come not because of the evils of capitalism but because of governmental and quasi-governmental forces that fly in the face of that system.
While one can certainly argue for putting regulatory parameters in place to try to "soft land" economic downturns before they turn into depressions like the one in 1929, the belief that central bankers, in cooperation with Wall Street, can save us from ourselves is a dangerous notion that may be about to explode in our faces.
Amity Schlaes argues in her book "The Forgotten Man: A New History of the Great Depression" that the reason why the Great Depression lasted as long as it did in America was, more than anything else, the uncertainty of the markets toward the actions taken by Presidents Hoover and Roosevelt. Entrepreneurs and investors saw a playing field where the rules could change drastically with little notice (and often little logic). The end result was that they kept their money and their ingenuity on the sidelines until World War II production demands and the Supreme Court’s actions brought more definition back to the marketplace. Roosevelt's central government approach, according to Schlaes, prolonged rather than shortened the Depression.
What has now evolved in the U.S. and other western economies is the notion that risk can be managed by the astute turning of economic levers. Unfortunately, part of that process contains the notion that some enterprises are too important to fail. It happened with the subsidies granted to the railroads that couldn't compete with low-cost air carriers, and with the savings and loan scandals of the 1980s when our tax dollars were used to bail out manipulators who should have gone to prison by the hundreds. It is now happening again with the hedge funds and sub-prime loan debacles. Once again, our tax dollars will likely be used—directly or through huge deficit expenditures—to bail out consumers and “entrepreneurs” who cried to Mama Fed when the risks they took came back to bite them.
I am not an economic dinosaur who thinks, for example, that we ought to tighten monetary policy to the extent of go totally back to gold standard era policies. But I do think that we are about to get hammered economically, because we don't let the negative pole of capitalism work to provide the most effective regulation of its positive pole.
I am a dyed-in-the wool capitalist and a strong defender of the economic system that brought prosperity, opportunity and economic vitality to our nation. But I am not so sure that what we have today is truly capitalism. Our obsession with "minimum risk," centrally controlled economics (market forces manipulated—not merely regulated—by a strong federal regulatory presence) may well have put off an economic reckoning that will be much more severe than it should have been if the risk/reward aspect of our capitalistic system had been allowed to function properly.
Everyone should have the right to succeed and profit in this country. And everyone should face the possibility of failing and going broke. When we try to "nuance" that basic economic reality, we get what may now be coming our way.
Subscribe Today and Save!!!
St. Charles Herald-Guide is an award-winning newspaper that covers all aspects of St. Charles Parish - from schools and parish government news to social events, features on our local residents and sports.
Order your subscription today!
Four teens were arrested in connection with 15 auto burglaries that occurred last...
A blaze last Thursday on River Oaks Drive in Destrehan has displaced a mother and...
A 54-year-old Destrehan man was indicted by a grand jury on two counts of...
Luling shift firefighter Joseph Riebow, 39, who’s fight against leukemia was...
The St. Charles Parish School Board will ask residents to approve up to $42 million...
Originally opened in 2005, the Satellite Center will celebrate 10 years at a...
Your family barbershop, beauty parlor, and hair salon all in one convenient location. Bring the whole family to our friendly and attentive staff for a relaxing shave and haircut or complete hairstyle. Children's cuts $12.00 and Adults starting at $14.00
Luling firefighter dies 2 months after being diagnosed with leukemia - 2372 views
Luling shift firefighter Joseph Riebow, 39, who’s fight against leukemia was documented in the Jan. 1 edition of the St. Charles Herald-Guide, died on Jan. 8.