The View From 1776

Government as the Agent of Prosperity

A reader asserts that, in the chicken-or-egg-first debate, prosperity is not possible without organization of the economy by government.

Posted by .(JavaScript must be enabled to view this email address) on 03/28 at 12:43 AM
  1. Thomas,
    This man is rapidly forcing America into communism! Please go to my website and find my videos on FEMA! FEMA is FEDERALIZING the banks, emergency rooms and the POLICE who will be confiscating weapons from AMERICANS! GOD help us!

    This is a fact from the very the foundation of United States Constitution: Article II, section 1, paragraph 5.
    Posted by Jason Leverette  on  03/28  at  10:28 AM
  2. I thank The View for quoting me and doing an article around what I wrote. I guess I am flattered.

    I was inspired to write what I did because of a book written by Felix Rohatyn, "Bold Endeavors: How Our Government Built America, and Why It Must Build Now". Mr. Rohatyn is the former investment banker who helped rescue New York City from bankruptcy in the 1970's, with the help of government aid. As we know, NYC recovered and paid back the government loans. From that government help, NYC went on to be better than ever. Nobody wanted to imagine what NYC could have become if it hadn't gotten government assistance.

    In his book Mr. Rohatyn also mentioned other great endeavors the government instigated and supported that expanded America's economic vitality and prowess, projects that no single private corporation could have imagined or was willing to take on. There was the building of the Erie Canal, the Louisiana Purchase, the building of the Panama Canal, the government facilitation of the transcontinental railway, support for the Interstate highway system, NASA and the GI Bill. The government also laid the ground work for today's communication system. In most cases the institutions the government inspired eventually were privatized. And let's not forget the security government affords us so that we can go about doing our business.

    It seems very difficult for The View to understand that the economy is a concerted effort between two sectors, private and public. However, those sectors should remain autonomous from each other for best results. Unfortunately both sectors became a bit too chummy with each other over the years, effecting the economy's honesty and efficiency. What the present administration is attempting to do is go back to when things worked better. However, it is going to take a lot of aid and upheaval to do it, something the The View can't concede to.

    The government, if managed properly, could have saved itself and the public a lot of heartache and money if it responded to Hurricane Katrina more swiftly and efficiently. But it couldn't, because the administration at the time had gutted the departments that could have managed it properly. And that's a good example why good governance is necessary, in order to create and sustain decent and mutually beneficial socioeconomic underpinnings.
    Posted by .(JavaScript must be enabled to view this email address)  on  03/28  at  12:38 PM
  3. The View has very selective criteria for what is "Socialist" and what is "free market."

    Subsidizing mass transit is socialist. Subsidizing highway construction is a free market activity.

    A single payer medical system is socialist. Subsidizing an entire insurance industry to act as a gate keeper for medical treatment is a free market activity.

    Regulating the financial industry who create interesting products like "credit default swaps" is socialist. Regulation traditional banks is free market.

    If I like it - it is free market. If I don;t like it, it is socialistic. "Progressive" or "socialist" in the hands of the View become all purpose adjectives that are attached to any activity of the current administration. As in,
    "The President put on his socialist pants this morning one leg at a time."

    It would be so refreshing if every once in a while The View could find something that Obama is doing right.
    Posted by .(JavaScript must be enabled to view this email address)  on  03/28  at  03:05 PM
  4. JJ- How do you define 'subsidize'? How is the insurance industry subsidized? Who regulates the banks? Do the major banks sit on the board of their regulator? When did that begin? What are federal excise taxes on fuel and tires supposed to pay for? Aren't interstate highways paid for by their users? Why shouldn't mass transit? Did the free markets create Fannie Mae and Freddie Mac or were they subsidized? Is it possible that the GSE's buying and securitization of mortgage backed securities in a FED induced, artificially low rate environment led to the fed regulated banks investing in such instruments? Was the coercive power of the federal governmnet employed in such a way that forced lenders into making stupid loans? Wasn't that kind of like subsidizing stupidity for short term political gain? Is there a difference in the constitutional grant of power regarding interstate commerce and attempts at intrastate regulation? Should there be any restrictions on federal power? What does the constitution say regarding those powers versus the states? Why would the federal government favor labor monopolies over the rights of property? Is that a subsidy benefiting one group over another? How does that comply with promoting the GENERAL welfare? Why is the tort system like it is? Are trial lawyers thus being subsidized? Centralization, an unaccountable bureaucracy, heavy taxation, the degradtion of property rights, contract nullification, fiat money, control of the education system, subsidizing politically connected interest groups like ACORN and others are the hallmarks of 'socialism'. Socialists tend to work in the interest of the administrative state and at the expense of the productive economy which subsidizes it all. Is it now being forced to subsidize social-statism? The state should subsidize nothing.
    Posted by .(JavaScript must be enabled to view this email address)  on  03/28  at  05:31 PM
  5. Jay writes: "It would be so refreshing if every once in a while The View could find something that Obama is doing right."

    I can give Jay two policy issues that Obama seems OK about:

    1- He is keeping Gitmo in business and merely talking about someday replacing it or moving the occupants to another site

    2- He is continuing the good fight to spread democracy in the Middle Easy by ramping up the dollar budget and number of soldiers to finish President Bush's well-considered goals.
    Posted by bill greene  on  03/28  at  10:59 PM
  6. Yes, I do think government has a proper role in securing the environment in which free and honest markets can work to the benefit of all. The most difficult snarl, to me, is, as is touched on, in the area of contract law. When is a contract valid and when is it not?

    Would an agreement to be a slave for the rest of your life and the lives of all your descendants be a valid contract? (I've seen several heated discussions on the related issues.)

    Would an agreement amongst bank robbers, defining their roles in the robbery, their responsibilities and cut of the take, be a valid contract?

    How do bankruptcy laws and related common law fit into the notion of upholding contracts?

    Maybe the AIG bonus contract was valid and maybe it was not. Without information, there's no way to know. The dictionary refers to a bonus being for extraordinary performance. What extraordinary performance was there? Simply not quitting? Who made this AIG bonus contract? Who proposed it? Who were in on the negotiations? Who were the ones offering the bonus? Should they be offering to pay person B from other peoples' money on condition of various performance? What's the deal with Dodd's special expemption in the statute? What prompted that? Was there any money or promise of money or other consideration involved?

    What's up with all this TARP and "stimulus" money going over-seas and into congress-critters' campaign funds? Has everyone forgotten that this phase of the Clinton-Bush-Obama depression started with congress pressuring the quangoes (GSEs) to make unsound loans, and, in turn, encouraging them to be backed in secondary markets?

    We've been so far away from honest, open, free markets for so many decades -- there's been so much force and fraud instituted by and through government -- that to talk of relying on government to establish an environment in which honest, open, free markets could operate is to be detached from reality.
    Posted by jgo  on  03/29  at  12:51 PM
  7. Igo is correct in suggesting that one must be detached from reality to expect today's government could ever provide an open free economy where honesty and good faith prevails. The demagogues in office have seduced half the populace into victim status where they look to government to support or favor them. The Washington pols will feed off this sucker base and keep expanding the burden of government on the backs of the producers.

    Since an empowering environment is needed to allow individuals to apply their genius, the chicken and egg riddle is moot. What is needed is the least government possible to provide such an open and free economy. In that sense, at least a fledgling government comes first. However, there would still be nothing actually done unless the individual members see fit to work hard and apply their initiative to create prosperity. The government alone creates nothing. That is why I believe the free economy comes first. The government can maintain that environment only so long as they remain very limited and avoid suppressing the prime actors--the common people-- who make everything happen.

    The extremely small role of government needed for success was displayed during the first three hundred years of this nation when the greatest-ever historical rise in living standards occurred. The isolated New World was safe from attack, had few intellectuals, no aristocracy, almost zero government, and the common people were free to work and save and proper mightily--and they did! Today, husbands and wives have to both work because half their income is taken away to be "redistributed."

    The corrupt practices and twisted governmental policies that Igo writes about have all come about due to a government that has expanded beyong an empowering status to a smothering status. That is the usual fate of populist democracies when half the people realize they can just vote goodies to themselves from the other half. The 50% tipping point seen in the last three presidential elections marks the point of no return.
    Posted by bill greene  on  03/29  at  03:25 PM
  8. Whether a contract is a contract at AIG isn't the point. What is going on now, the phenomenon of seemingly misguided outrage, transcends contracts. The glaring issue is that AIG and what it represents at the moment is symbolic in the eyes of the public. It represents a tipping point in which the public have finally had enough with corporate America and its scheming ways, and the disproportion in wealth and salaries between it and ordinary people. The people at the top have been getting too many breaks for too long, as people see it. The AIG debacle is the last straw.

    To many rational people, what corporate America, especially Wall St., was making and getting away with was obscene, especially with its leadership, who steered their and our ships into the rocks. Now the chickens have come home to roost and it's time for accountability.

    Perhaps this kind of outrage, like that directed at AIG, should have occurred after the collapse of Enron. If it happen then perhaps corporate America would have dialed back then. But back then there wasn't sufficiently enraged people to make a difference, like now.
    Posted by .(JavaScript must be enabled to view this email address)  on  03/29  at  03:51 PM
  9. The mob needs symbols and misdirection. The left is happy to give it. The problem is government policy. Look at fannis mae and freddie mac bonuses. Look at AIG's campaign contributions. The FED runs the banks. The congress 'regulates' the financial services industry through the sec. A quick summary of what's occurred:

    -The fed lowered rates from 6.5 to 1%$
    -SEC allowed increased leverage at the behest of congress and the white house
    -Congress blocked enhanced GSE supervision and allowed leverage of 60x
    -White House/Congress and the 2003 home ownership act
    -Clinton Adm repeal of Glass Steagall and initiated the CFTC Derivatives Modernization Act
    -The Clinton Administration, Andrew Cuomo at HUD, the CRA and the '92 Boston Fed report on 'outdated lending standards'
    -Fall 2007 FASB MTM accounting initiated and repeal of the uptick rule (at the market top)
    -Politicians are short sighted, money hungry, self-interested jerks who, unlike free market participants, have the power to coerce their will on others.
    -During recessions, the private and productive sector lowers prices because the public is not obliged to buy it's products and services. During recessions, the governmnet raises prices because the public is obliged through coercion.

    Don't run with the mob. Don't be misdirected by political hacks and statist rationalizations. Try to understand what has occurred to avoid letting it happen again.
    Posted by .(JavaScript must be enabled to view this email address)  on  03/29  at  04:36 PM
  10. Please, correct my ignorance. What provisions of Glass-Steagall? I seem to recall one or two bogus provisions of Glass-Steagall that were removed a few years back. But then that's how these things happen. They enact something that has a nice sounding name, but a lot of unconstitutional and downright evil stuff packed into it, or, as in this case, they say they'll repeal something that was bad, but fail to mention they'll be getting rid of several good provisions.
    Posted by .(JavaScript must be enabled to view this email address)  on  03/29  at  07:37 PM
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