Friday, November 18, 2011

What should the role of government be?

The Occupy Wall Street protests taking place across the country reflect a growing populist anger among Americans. The protesters have every right to be angry, but their anger is misdirected. In many ways, so are their solutions.

These protests seem to reflect a widespread perception that many of the problems were created by unbridled free markets. Many people believe a pure free market would lead to enslavement by mega corporations and this can only be prevented by regulations and government oversight. Those are false, though pervasive myths. Free-market capitalism didn’t create these problems. We really don't even have free markets. But if we did, corporations would have less power, not more.

Think about it. Businesses can't force anyone to do anything against their will. In a free market, every interaction between consumers and businesses would be voluntary - on both sides. While that would mean some businesses might not strictly comply with the Americans with Disabilities Act, it would also mean others would spring up to cater to the disabled. Also, bankers couldn't extract multi-million dollar bonuses and multi-trillion dollar bailouts from the public. Electric companies couldn't steal people's property to install power lines over it.

Corporations can't take your money. They can't take your land. They can't force you to buy or advertise what they sell. They don't have any power over individuals.

But the government does. And it's for sale.

Corporations lobby for government policies that force taxpayers to subsidize their profits. Corporations bribe public officials to craft a regulatory environment that works to their benefit. Oppressive regulations disproportionately burden smaller competitors while harming consumers. Corporate interests convince government officials to buy their products with money taken from taxpayers.

But these problems extend far beyond big business. Any number of special interests groups, whether based on race, age, gender, political ideology, or occupation, do the same thing. Trying to take money out of politics only treats a symptom of the underlying disease. The real solution is taking power away from the government.

Our system of government is basically an unending battle between groups of people fighting over the power to control each other.

It's pretty barbaric, when you think about it. But this dark side of democracy isn't a secret. The founders knew about it, which is why they chose not to give us one. Instead, they gave us a constitutional republic based on principles of natural rights and limited government. It's time we return to it.

Gingrich is a fraud

During last week's debate, Newt Gingrich was asked what he had done to earn the $300,000 Freddie Mac had given him. Gingrich claimed Freddie Mac paid him as a "historian" who warned the company about the coming housing disaster. He claimed to have warned "this is a bubble ... this is impossible."

His explanation was so transparently preposterous I actually broke out laughing. It's not just a lie. It's almost the opposite of the truth.

In reality, it was Ron Paul who spent years fighting Fannie Mae, Freddie Mac, and the other GSEs. Paul correctly pointed out that they create moral hazards that inevitably lead to malinvenstment. Paul specifically called out Fannie and Freddie's role in creating the housing bubble at least as far back as 2003, years before most people suspected anything was wrong. He warned Fannie and Freddie would fail when the bubble inevitably burst, and would dump huge losses on the taxpayers. Ron Paul's only compensation for saying these things was the satisfaction of telling Americans the truth, even though they didn't want to hear it.

Freddie and Fannie have always been popular with Democrats, but faced some opposition from Republicans (like Paul) who realized their inherent problems. To fix this, Freddie Mac hired several high-profile Republicans to lobby other Republicans on their behalf. Gingrich was actually paid at least $1.5 million to do so.

Now Gingrich is taking credit for what Ron Paul said, even though he was paid millions of dollars to convince other Republicans that guys like Ron Paul didn't know what they were talking about.

That's Gingrich.

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