Saturday, November 15, 2008

Hurray! It's the Weekend of Capitalism!

Say what you will, call him names! A lame duck, yes mistakes have been made, the rules of laissez-faire capitalism were violated, but right now it is he who stands between prosperity through free market principles, and the forces of Statism, who wish to reduce the financial sector to a tragic shadow of its former self, a mere government utility!

While experts in the US are still trying to figure out what happened, some Europeans already knew before the event: it's capitalism, stupid! Isn't the cause of crime, the law? Now is the time for the coup of state, let the ax fall on the evil system!
- Caption: "Sunriser II", by Bobbie Carlyle -

Here are two opinions: one by the most underestimated US President in history, George W. Bush - and an article by Objectivists Yaron Brook and Don Watkins on the Op-Ed page of the Ayn Rand Center for Individual Rights: a urgent plea for the separation of Economy and State. Europeans are urged to take note of a field virtually unknown to them. But first, the news:

CNN: "Bush ready to defend free-market principles during summit"

(...) President Bush signaled that he's ready to defend Western-style capitalism and free-market principles during what will be one of his last appearances on the world stage. (...) As leaders of the world's 20 largest economies, dubbed the G-20, gather in Washington, some European leaders are pushing for global financial regulation. (...) >>>

Wall Street Journal: "The Surest Path Back to Prosperity - 'If you seek economic growth, social justice and human dignity, the free-market system is the way to go'," by George W. Bush

As we have seen in recent months, financial turmoil anywhere in the world affects economies everywhere in the world. And so this weekend I'm going to host a Summit on Financial Markets and the World Economy with leaders from developed and developing nations that account for nearly 90% of the world economy. The leaders attending this weekend's meeting agree on a clear purpose -- to address the current crisis, and to lay the foundation for reforms that will help prevent a similar crisis in the future. (...) the actions taken by the U.S. and other nations are having an impact. Credit markets are beginning to thaw. Businesses are gaining access to essential short-term financing. A measure of stability is returning to financial systems.

- Caption: "Refuge" by Perrin Sparks -

(...) we must recognize that government intervention is not a cure-all. For example, some blame the crisis on insufficient regulation of the American mortgage market. But many European countries had much more extensive regulations, and still experienced problems almost identical to our own. History has shown that the greater threat to economic prosperity is not too little government involvement in the market, it is too much government involvement in the market.

We saw this in the case of Fannie Mae and Freddie Mac. Because these firms were chartered by the U.S. Congress, many believed they were backed by the full faith and credit of the U. S. government. Investors put huge amounts of money into Fannie and Freddie, which they used to build up irresponsibly large portfolios of mortgage-backed securities. When the housing market declined, these securities, of course, plummeted in value. It took a taxpayer-funded rescue to keep Fannie and Freddie from collapsing in a way that would have devastated the global financial system.

- Caption: "We the Living", by Nick Gaetano -

There is a clear lesson: Our aim should not be more government -- it should be smarter government. All this leads to the most important principle that should guide our work: While reforms in the financial sector are essential, the long-term solution to today's problems is sustained economic growth. And the surest path to that growth is free markets and free people.

In the wake of the financial crisis, voices from the left and right equate the free-enterprise system with greed and exploitation and failure. It's true this crisis included failures -- by lenders and borrowers and financial firms, and by governments and independent regulators. But the crisis was not a failure of the free-market system. And the answer is not to try to reinvent that system. It is to fix the problems, make reforms, and move forward with the free-market principles that have delivered prosperity and hope to people all across the globe. (...)

Nations that pursued other models have experienced devastating results. Soviet communism starved millions, bankrupted an empire, and collapsed as decisively as the Berlin Wall. Cuba, once known for its vast fields of cane, is now forced to ration sugar. While Iran sits atop giant oil reserves, its people cannot put enough gasoline in their cars.

The record is unmistakable: If you seek economic growth, social justice and human dignity, the free-market system is the way to go. It would be a terrible mistake to allow a few months of crisis to undermine 60 years of success. (...) >>>

Give Bush a buzz z

- Caption: "The Anchorage" by Bryan Larsen -

Ayn Rand Center for Individual Rights: "Stop Blaming Capitalism for Government Failures", by Yaron Brook and Don Watkins

Speaking of the financial crisis, French president Nicolas Sarkozy recently said, “Laissez-faire is finished. The all-powerful market that always knows best is finished.” Sarkozy was echoing the views of many, including president-elect Obama, who assume that the financial crisis was caused by free markets--by “unbridled greed” unleashed by decades of deregulation and a “hands off” approach to the economy. And given this premise, the solution, they say, is obvious. To solve this crisis and prevent another one, we need a heavy dose of Uncle Sam’s elixir: government intervention. (...)

But while capitalism may be a convenient scapegoat, it did not cause any of these problems. Indeed, whatever one wishes to call the unruly mixture of freedom and government controls that made up our economic and political system during the last three decades, one cannot call it capitalism. (...) Take a step back.

- Caption: "Lunch Break" by Quent Cordair -

In the lead up to the “Reagan Revolution,” the explosive growth of government during the ’60s and ’70s had left the American economy in disarray. A crushing tax burden, runaway inflation, brutal unemployment, and economic stagnation had Americans looking for an alternative. That’s what Reagan offered, denouncing big government and promising a new “morning in America.” (...) Bush Jr., often laughably called a champion of free markets, presided over massive new governmental controls like Sarbanes-Oxley and massive new welfare programs like the prescription drug benefit.

None of this is consistent with capitalism. (...) The government’s job under capitalism is single but crucial: to protect individual rights from violation by force or fraud. America came closest to this system in the latter half of the nineteenth century. The result was an unprecedented explosion of wealth creation and consequent rise in the standard of living. Even now, when the fading remnants of capitalism are badly crippled by endless controls, we see that the freest countries--those which retain the most capitalist elements--have the highest standard of living.

Why then should capitalism take the blame today--when capitalism doesn’t even exist? (...) Consider the current crisis (...) the driving force is clearly government intervention: the Fed keeping interest rates below the rate of inflation, thus encouraging people to borrow and providing the impetus for a housing bubble; the Community Reinvestment Act, which forces banks to lend money to low-income and poor-credit households; the creation of Fannie Mae and Freddie Mac with government-guaranteed debt leading to artificially low mortgage rates and the illusion that the financial instruments created by bundling them are low risk; government-licensed rating agencies, which gave AAA ratings to mortgage-backed securities, creating a false sense of confidence; deposit insurance and the “too big to fail” doctrine, whose bailout promises have created huge distortions in incentives and risk-taking throughout the financial system; and so on. In the face of this long list, who can say with a straight face that the housing and financial markets were frontiers of “cowboy capitalism”? (...)
- Caption: "Cityscape Texture Study II", by Bryan Larsen -

This is just the latest example of a pattern that has been going on since the rise of capitalism: capitalism is blamed for the ills of government intervention--and then even more government intervention is proposed as the cure. The Great Depression? Despite massive evidence that the Federal Reserve’s and other government policies were responsible for the crash and the inability of the economy to recover, it was laissez-faire that was blamed. Consequently, in the aftermath, the government’s power over the economy was not curtailed but dramatically expanded. Or what about the energy crisis of the 1970s? (...)It’s time to stop blaming capitalism for the sins of government intervention, and give true laissez-faire a chance. Now that would be a change we could believe in. >>>

Wall Street Journal have a touching short documentary on the Great Depression up on their video archive ...

Art in this post by the Quent Cordair Fine Art Gallery for Romantic Realism

Update: has the semi pan-European position ... they propose to rule the world by committee ... take note of this: "today’s European leaders are about as interested in solving global problems as was Otto von Bismarck, who devoted his life to empire-building and the practice of Realpolitik. Today’s European leaders are trying not only to revive the Roman Empire in the form of a unified Europe, but they are also seeking to rebalance global power in such a way that places Europe at the top of the international pecking order" ... read it all:

The Brussels Journal: "Europe Is Obama’s First ‘Global Test’"

- Filed in "The Ethics of Capitalism" -


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