(cross-posted at The Smirking Chimp)
Ain't nothin' like the 'free market', is there?
For years now, we've heard conservatives go on and on and on ad nauseum about the miracle of the free market. Yes, that magical 'invisible hand' that leads to properity, prosperity and more prosperity! Why does it work? Uh, because it's supposed to, that's why! Of course it works! See how rich I am?
Call it 'faith-based economics'.
Conservatives are all about faith. The same people who pooh-pooh evolution as 'only a theory' and believe global warming is a hoax have an almost religious belief in laissez-faire capitalism. It is an article of faith with them that if the shackles of regulation and taxation were thrown off, a perfect economic miracle would occur. Everyone would be well-off – some more well-off than others, of course. The Market would ensure that competition was fair, and that therefore there would be no need of regulation! The Consumer would decide whether to buy a company’s products, and so the company would be forced to be ethical or else be punished by the Consumer. But the twin devils of Taxation and Regulation keep this miracle from happening.
This economic theory does not need any empirical evidence to be believed in fervently. The theory is more important than the results. If the results don't pan out, it only means that the theory has not been applied properly. More tax cuts! More deregulation!
You serfs who are losing your homes - it's all your own fault! If you can't afford the usurious interest rates, then you have no business buying houses. You mean you believed what your mortgage broker told you? Hey, not our fault. Caveat emptor, baby. Don't expect the government to come to your rescue, you freeloaders!
Yes indeed, it's all about taking risks - those CEOs deserve their zillion-dollar salaries because they take such big risks, and of course are completely reponsible for those risks. That is, unless they're not. Then it's Titty Time! Belly on up to the Big Government Boob! But only for the big guys. There's always a way to get someone else to pay for your mistakes when you're in the big leagues. The rest of us can go pound sand.
How come you don't hear anyone saying, "You shouldn't have taken on debt that you can't afford!" to Bear Stearns? These companies are, instead, fêted for their boldness and aggressiveness.
Here's what happened with the housing crisis.
How do you get Americans to spend money on consumer goods when their wages have stagnated? Business profits depend on consumer spending, but if consumers' wages have declined in real buying power while prices have gone up, how are businesses going to make profits after they've cut salaries as far as they can cut them?
Make up for the lack of wages by artificially inflating housing prices, then induce people to borrow against their equity. Did I say induce? How about force? Yes, force. When you suppress wages in order to fatten your bottom line while the cost of living continues to rise, then dangle out hope in the form of equity, and the only other alternative is bankruptcy (which, after the Bankruptcy Bill of 05, is even less available), then I would call that an 'offer you can't refuse' a la The Godfather.
But, consumers can be squeezed only so much, and eventually these vultures will pick every bit of flesh off of the bones of our carcasses. The 'invisible hand' has strangled the last breath out of us. The corporations have shifted all of the costs of their doing business onto us, and have kept the profits for themselves. And now that the top-heavy pyramid is about to crash, we're expected to pay for their sins even more by taking on the cost of their bailouts, and the CEOs who steered these companies into the iceberg float merrily away with their golden parachutes.
But those of us losing our homes, or in danger of losing our homes? That's a different story entirely. Bail us out? Oh, noes! Why, that would be enabling our irresponsibility! Moral hazard, don't you know! Hard-working, honest George Bush, who has been such a successful self-made businessman himself and has never needed a bailout or a handout, wouldn't consider it.
I understand the idea that to not bail out the big palookas would mean that the whole economy would come crashing down. So, if you're going to bail out these guys, why not bail out us as well? After all, we seem to be able to pony up three billion every week to keep on killing people. How about a few billion so regular Americans can stay out of the poorhouse? I sure could use a hand right about now.
That last one was a joke, I know. Who do I think I'm kidding?
But I sure wish I could get that 'Invisble Hand' from around my neck. It's hard to breathe.