By engaging in bailout after bailout, government bureaucrats subsidize failed but well-connected losers by effectively confiscating the necessary resources from productive and successful members of the economy. Ron Paul explains why such bailouts are a bad idea and why we should allow the natural incentives and regulations of the free market to pick the winners and losers in our economy.
The Bailout Surge
by Ron Paul
[Last] week the bailout of the Big Three automakers was under heavy consideration in Congress’s lame duck session. I have always opposed government bailouts of private organizations. Back in 1979 Congress had hearings about bailing out Chrysler and I was on record pointing out that these types of policies are foolish and very damaging to the long term economic health of our country. They still are.
There was also renewed pressure [last] week to bailout homeowners and send another round of stimulus checks to “Main Street” to balance out all the handouts to big business. It seems that eventually the entire economy is going to be blanketed over with Federal Reserve notes. Most in Washington are completely oblivious as to why this model of money creation and spending is so dangerous.
We must remember that governments do not produce anything. Their only resources come from producers in the economy through such means as inflation and taxation. The government has an obligation to be good stewards of these resources. In bailing out failing companies, they are confiscating money from productive members of the economy and giving it to failing ones. By sustaining companies with obsolete or unsustainable business models, the government prevents their resources from being liquidated and made available to other companies that can put them to better, more productive use. An essential element of a healthy free market, is that both success and failure must be permitted to happen when they are earned. But instead with a bailout, the rewards are reversed – the proceeds from successful entities are given to failing ones. How this is supposed to be good for our economy is beyond me.
With each bailout we hear rhetoric that this is the mother of all bailouts. This will fix the problem once and for all, and that this is absolutely necessary to avert disaster. This sense of panic squeezes astonishing amounts of dollars out of reluctant but hopeful legislators, who hate the position they are being put in, but are relieved that it will be the last time. It is never the last time, and again and again we are faced with the same scenarios and the same fears. We are already in the bailout business for such a staggering amount that admitting it was wrong in the first place would be too embarrassing. So the commitment to this course of action is only irrationally escalated, in the hopes that somehow, someway eventually it will work and those in power won’t have to admit they were wrong.
It won’t work. It can’t work. We need to cut our losses and get back on course. There is too much at stake for too many people to continue down this road. The bailouts thus far to AIG, Bear Stearns, Fannie and Freddie, and TARP funds amount to around $1.5 trillion. Considering our GDP is $14 trillion, and our Federal budget is already $3 trillion, this additional amount will significantly eat into our future lifestyles. That amounts to an extra $5,000 that every person in the country needs to somehow produce just to keep up. It is obvious to most Americans that we need to reject corporate cronyism, and allow the natural regulations and incentives of the free market to pick the winners and losers in our economy, not the whims of bureaucrats and politicians.
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[...] 2008 misalnya, Ron Paul, meluncurkan tulisan “Oh No, Not Another Bailout!” di situsnya RonPaul.com. Tulisan ini memicu komentar soal pekerja AS, yang dianggap tidak rajin untuk tidak mengatakan [...]
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[...] 2008 misalnya, Ron Paul, meluncurkan tulisan “Oh No, Not Another Bailout!” di situsnya RonPaul.com. Tulisan ini memicu komentar soal pekerja AS, yang dianggap tidak rajin untuk tidak mengatakan [...]
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[...] Oh No, Not Another Bailout! By engaging in bailout after bailout, government bureaucrats subsidize failed… [...]
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It is great to see everybody responding to this issue. Let’s hope for the best and prepare for the worst. I wish we had many more people with Dr. Ron’s mind set in the government.
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Uh, with all due respect, Dr. Paul respected Ronald Reagan and actually worked to support his campaign to win the Texas republican delegation for president. They saw eye to eye on quite a few things, and had a mutual respect. Reagan believed that Libertarian values were at the core of the republican party, and that folks like Paul were a very necessary voice that needs to be heard in Govt.
It’s well documented. Reagan’s been quoted several times speaking kindly about Ron Paul. Talk about not doing your research!
Here’s a crowbar, use it on the foot stuck in your mouth… DOH!
Aaron
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Aaron it seems as though Matt has spotted that oddly shaped birthmark on your back…Is it a bulls eye?..hahaha I am a 30 yr old that is living in his 2nd home already..I am one of those people you spoke of in a previous post that didn’t have the 20% downpayment so I took the 6% seller contribution. I can say this though, the people spending more than they have isn’t exaclty our fault, it took many years of planning for this to happen. We were enabled to do this for good reason. Do you think any of the original members of the Fed could forsee this happening? It’s a joke once you know when the seed was planted. I just hope my 401K holds it’s own in this tough time…Oh wait! It’s with J.P. Morgan…it will be fine…lol History seemed really boring in school, but know it’s light has changed, to all who have any doubt about Dr. Paul’s ideas, pick up a book, read about our nations economic history, it tells tales of which were living today…….
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OMG this totally reminds me of Ron Paul back in the 80′s! I think he would have hated Reagen and Volcker (who was a Carter apointee fyi).
Even a broken clock is…
I know ‘long term’ he was totally right (as everyone here seems to agree), but man, you peeps ever do your research?
Ron Paul, circa terrible call. Not only did he not see volcker, but he failed to see Reagan? Soooo Volcker broke the back of inflation, where was the free market then? Oh wait, it was getting ready to screw over someone else? Or maybe be more efficient!
Check out his paper FROM 1981:
“Impending Social Strife?
The greatest threat facing middle and working class Americans
is our depreciating paper currency.”
“We probably will see widespread civil disorder in the 1980s,
as a direct result of our faltering economic system.”
Man,
OMG the 80′s were terrible, fraught with “widespread civil disorder”. That was soooooo prescient. Thanks for admitting your prescience, or lack thereof. Or even any humility. At all.
Two decades later.
- Matt
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Matthew Stone replies:
December 8th, 2008 at 9:21 pm
Hi,
Errr, since rules and oversight are so rad, shouldn’t it also be a good idea then to audit the ‘EVERYONE ELSES’ balance sheets to make sure they aren’t borrowing beyond their means?
Last I heard it wasn’t the fed’s balance sheet that screwed things up, it was ‘EVERYONE ELSE’buying stuff they couldn’t afford at inflated prices?
Where is the personal accountability here?!?!
———–
Errr, it’s the ‘last I heard’ part that is causing you a problem.
Turn off the MSM
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Id say if we really had to, give the american taxpayers all that money to buy an “American” car and then the car companies would still have to pay us back. Now that’s something somewhat better then giving them an outright loan.
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I think we have to remember what many of the Founding Fathers said in one way or another, which is that the form of government and society they envisioned only works with a moral and educated (or I will say intelligent) citizenry. None of us here want all this government intervention in the economy – but if we have business leaders who are corrupt, or overly greedy, or just plain dumb sometimes we are going to get just what we don’t want. We can’t turn back the clock to the 1840′s or whatever. Most people today may not want socialism, but they also don’t want a free enterprise system that sells out the good of the country in the name of short terms profits, etc. If they see that (or think they see it) they are going to look to the government.
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