Our power-grubbing politicians never shy away from blaming the shortcomings of capitalism for the “Great Recession” of the 21st Century. The old mantra goes, “Capitalism is a flawed system that requires government intervention to alleviate the suffering caused by its shortfalls.” Supported by their tax dollar dependent cronies in academia and their big government loving mouthpieces in the mainstream media, our ruling elite has been effective in socializing the masses that they know what they are talking about. It is, of course, all an attempt to justify expanding the size of government even more, so there is more for the politicians to give away to their faithful supporters.
Capitalism did not cause the financial crisis that we are still mired in some 29 months after it began; crony capitalism did. Crony capitalism is loathed by every proper capitalist because it is more akin to the corrupt socialist systems of the past than to true capitalism. In true capitalism, the primary responsibility of the government is to protect private property rights and prevent and punish fraud. How can a system that confiscates private property through taxes (income and property) and transfers that property to others (domestic and foreign welfare) be called capitalist? How can a system that takes from one to prop up the failure of another be called capitalist? In terms of fraud, how many bank loan officers and borrowers who provided false information on the mortgage applications that contributed to the crisis have been prosecuted and jailed? Uncle Sam has a weak record at best when it comes to exhibiting the qualities of a government operating in a capitalist system.
Instead, Washington has built a system based on favoritism and patronage. Look at “Too big to fail.” This should be translated into “Our Friends are the best.” Hundreds of billions, if not trillions, of taxpayer dollars, have gone into bailing out companies that in return can be counted on to contribute billions of dollars to Republican and Democratic campaign coffers. The rationale we were told is that if any one company went under our economy would fall off the cliff. Really, I don’t remember being airborne when Lehman Brothers was allowed to go belly up. “Too big to fail” was a hoax perpetrated on the American public so the politicians could repay their campaign benefactors. And they are at it again with their attempt to institutionalize “too big to fail” in financial reform legislation before the Senate.
In a true capitalist system GM and Chrysler would have been allowed to go bankrupt. Their assets would have been purchased by other entities and workers would have been hired for hopefully a more profitable endeavor. The economy would have been rid of a drag on it and, therefore, would be more able to operate at an efficient level. Instead, what we got from our crony capitalist system was a huge taxpayer bailout that primarily benefitted the United Auto Workers Union (UAW). In fact, it’s telling that the entity which for years demanded higher wages and benefits and was most responsible for the demise of GM and Chrysler was able to claim a huge stake in both companies ownership as a result of the government’s bailout deal. At the end of the day, the UAW is richer, the politicians get their campaign contributions from Motown, and the American taxpayer will ultimately have to bail out the car companies again sometime in the future.
Now, it is true that if the bailed out financial companies were left to go under a lot of honest folks would have lost a lot of money. But, that is only because of the system the crony capitalists have built. The Federal Deposit Insurance Corporation (FDIC) allows depositors to place their money in banks without any worry that regardless of how irresponsible their bank may be they will always get their money. Would you eat at a restaurant that was known for food poisoning? I didn’t think so, but it doesn’t matter to you that you probably still have your money in a bank that acted irresponsibly and lost it in the early 2000s. Even though they have brought the economy to its knees, you will still get your money through government insurance. Then, there is Fannie and Freddie Mac who really work on behalf of mortgage lenders and the real estate industry. These two entities guaranteed (with taxpayer money) all the irresponsible behavior of the failed banks. When the crisis unfolded what did Uncle Sam do to them? He bailed them out and allowed them to add even more mortgages to their portfolio.