Trump’s Unfortunate Wording and the Worker’s Party
The world has already dealt with the worker’s party.Read More »
One of the best books I’ve picked up recently is The Housing Boom and Bust by Thomas Sowell – possibly the smartest man in America. (My words, not his…) The most interesting thing in the book is that everything seemed to come back to the same fundamental point: A disconnect between people making decisions and the negative consequences arising from those decisions. That got me thinking…
Barney Frank, (2005 / 2009) probably the person singly most responsible for the economic malaise we find ourselves in, may be the poster child for this disconnect. After spending decades bullying regulators, threatening financial institutions and forcing banks to sacrifice centuries of good lending practices on his alter of “affordable housing,” he not only still has a job, but in 2006 became the Chairman of the Finance Committee, one of the most powerful positions in all of government. The fact that the voters of the 4th District in Massachusetts are …gullible (I’m being charitable) enough to continue to send this buffoon to congress and that the Democrats in the House then choose to inflict him on the rest of their constituents is but one example of that disconnect.
Everybody knows that playing the lottery is not an investment grade activity. It might be somewhat exciting for a few moments, but you wouldn’t plan financing your kid’s college with it. The chances of you breaking even if the wrong numbers come up are not particularly good. That is of course unless it was AIG who was running the lottery. AIG had become a very risky company over the last decade, yet hundreds of sophisticated financial institutions from around the world decided to play the lottery with them. When it finally became clear that AIG’s plan for success was crossing both fingers while rubbing its lucky penny, one might think that the institutions that bet on its solvency might get a haircut. Not so much… Actually it was the American taxpayers who received the haircut and a lot more when the government stepped in and poured $170 billion in AIG to keep it from failing. Sure the AIG shareholders lost most of their investment, but the bettors themselves actually made out like bandits. As AIG’s position became clear, the markets hammered the value of its guarantees to a fraction of their face value. In the real world those companies would have felt the billions of dollars of pain as their bets on AIG went south. In the Bizarro world of government however, not only did these financial giants not see their lottery tickets turn to confetti, but the American taxpayer actually gave them their money back and the grand prize winnings as well.
Everyone knows that American public schools are a disaster, yet every year they continue to get more money. There is virtually a zero correlation between educational success and school funding. Governments – at all levels – and unions have created a Chinese wall between student performance and teacher pay. Budgets and bureaucracy continue to grow while test scores continue to languish. Administrators dumb down tests and push students out the door with diplomas they can’t read and unprepared for the competitive world around them. The United States spends more money on education than most countries in the world, yet American students continue to trail badly on test scores. While administrators and bureaucrats see their paychecks, headcounts and budgets grow, it is the ill equipped students upon whose shoulders the consequences of failure fall.
After $2 trillion in taxpayer money and forty years of Great Society programs, the problems of the American underclass are at least as bad off now as they were when The Moynihan Report was published. Welfare budgets and bureaucracies continue to grow while the outcomes of ineffective – nay counterproductive – policies fall on those who they are supposed to help. From out of wedlock pregnancy to unemployment to violence and a failing education system, by virtually any measure, the people who welfare policies are supposed to help are worse off today than they were forty years ago.
The fundamental point here is this, men are imperfect beings, but we (generally) learn from our mistakes. By the government inserting itself and its various bureaucracies and regulators into the action / consequences learning paradigm, it removes the necessity for Americans to learn from our mistakes. It eliminates what is arguably man’s greatest resource, his ability to reflect with dispassionate objectivity on the past and adjust his actions in an attempt to change the outcomes in the future. Tellingly, it’s not a question of aggregation vs. individuals. Large aggregations of people (companies) fail all the time. 2009 alone saw such household names as Linens and Things, Bennigans, Eddie Bauer and Six Flags file for bankruptcy. The difference is that in the private sector the people making the decisions about where to spend the resources are the ones who will benefit or burn as a result of those decisions. The beauty of the private sector system is that failures and bankruptcies free up resources to be utilized in a more efficient way, either inside a restructured company, as part of another organization where the assets will be used more effictivly or with investors who will invest somewhere else. At the end of the day it is the failures in the marketplace that give investors and entrepreneurs the foundation of knowledge and experience necessary to build successful endeavors. Henry Ford once said: “Failure is only the opportunity to begin again more intelligently.”
Not only is such phoenix-like behavior is never present with government, what’s worse is that as a result of government’s power of coercion, much of the non-government sector is forced to expend resources in inefficient and ineffective ways by people who have no stake in the outcomes. Government regulation and intervention are twin yokes around the necks of the American people and a weight on the American spirit. While there are areas where government’s role is appropriate such as immigration, national defense and policing, over the last half century it has become a Borg against which all resistance is futile. The demand for government to recuse itself from the everyday activities of our lives is not a suggestion that America has become a failed state. On the contrary, it is a call for America to become again a country powered by the drive, ingenuity, passion and extraordinary compassion of its citizens, not the playground of disconnected politicians.
Americans by their very nature are risk takers, explorers, builders and achievers. From freeing the world’s population from a life on the farm to introducing the automobile to the masses to winning two world wars to inventing the microchip, American ingenuity has been driving the advance of the human condition for 220 years. Now, at a time where the world is in the midst of a staggering financial tumult and modernity is under attack, there could be no better time for government to rein in its tentacles and let the American people pick up the flag and lead the race towards finding solutions to both. There’s no guarantee that we won’t stumble or fail along the way, but at least we would learn from our lessons and adjust. That’s more than we can say about the government over the last 50 years.
Thomas Sowell tells us in very stark terms exactly what went wrong. It’s up to us to take away the right lessons and make the proper adjustments. With Tuesday’s clarion call of an election, it appears as if the people of Massachusetts may have found a Rosetta Stone for translating lessons learned into corrective action. Now let’s see how those lessons translate for the other 49 states…