The federal government has now bailed out three major US financial institutions: Freddie Mac, Fannie Mae, and the American International Group. Some folks disagree with this decision. You hear people shout, “No More Big Government.”
The people who support the popular catch phrase, “Big Government,” believe that the free market can fix itself. Free market die-hards, like libertarians – Ron Paul’s Revolutionaries – believe that human beings are rational enough to fix the mortgage crisis and inflation (the rise of food and gas). Libertarians believe that a person’s financial interests will always supercede a person’s emotional desires, like greed.
But if that’s the case, why did white business owners before the 1950’s only take money from white customers? Or better yet, how can libertarians categorize a person’s financial interest as rational thinking? Because to me, it seems when folks are more concerned with following their own pocket books, they can get a little greedy and act completely irrational.
Take a look at today’s economy. The American financial system is in shambles. Not one economist will predict an end to America’s financial crisis, and the federal government is running out of strategies to bail out Wall Street. And now taxpayers have to pay for their mistakes.
Now, I’m not against taxes. I’m glad I won’t have to pay for my kids to go to school K-12. But I am against die-hard free-market thinkers, and I blame them for today’s 6.1% unemployment rate and the mortgage crises.
Why? Let’s not forget that more Americans could afford to buy homes because mortgage bankers decided to lend money to Americans who weren’t financially secure. It wasn’t because the wages of Americans increased. They let people buy houses with little or no down payment and they gave money to people who couldn’t afford to have three months rent sitting in the bank.
This all sounds a little risky, and it was. Americans have been roughly making the same amount of money since the 1970’s (when you consider how much the cost of living has increased). So when inflation started to rise again about two years ago, Americans couldn’t afford to pay for their new homes; an outcome Wall Street desperately tried to ignore.
At the same time, it’s also nice to give moms and dads the opportunity to buy a home. The problem is that mortgage investment banks didn’t think the cost of food and gas would rise. Moreover, business owners have been unwilling to raise real wages for American workers for years. Maybe if CEOs would’ve shared a tiny bit of their million dollar bonuses, the American economy would not be so bad.
Maybe the libertarians are right. Maybe a person’s hunger for money drives all human behavior. While “Big Government,” gave Wall Street the reins, the big bosses followed their personal pocket books so they could personally benefit while Middle America fell apart.
It’s too bad this libertarian theory doesn’t benefit all Americans, or maybe it’s not intended to.
But the next time you hear someone say they’re against “Big Government,” ask them if they want to pay for their kids to go to school K-12. And then ask them if they think human beings are greedy. If the person seems a little baffled by your questions, ask her/him to explain the accounting scandal a few years ago with ENRON and Arthur Andersen, and why American wages have continued to stay the same.
I’m not saying I want a huge bureaucratic government involved in my personal life, and I’m not against Wall Street. But I also don’t want someone that’s more powerful than me to make a bunch of risky irrational greedy decisions with my hard earned money. Because even though I don’t own any stocks, that doesn’t mean my personal paycheck isn’t directly tied to the American economy, and therefore, Wall Street.
So let’s be clear, the people who shout “No More Big Government,” believe Wall Street watches out for American’s financial interests, and that human beings only act out of compassion and not greed?
(Interesting. I’d like to ask the family who just lost their house.)