Now that the government has proposed bold solutions to the financial meltdown, and also rejected them, I am digging my underground bunker and hoarding canned goods. I call that “doing my part.”
I wasn’t truly scared until I saw on the Internet that Michael Moore has waded into the economic discussion. When citizens start getting their economic guidance from Michael Moore, well, that is a harbinger of doom. But the worst part is that I’m not entirely sure he’s wrong. Stay with me on this.
There is a growing school of thought – let’s call it the Michael Moore school – that the $700 billion dollar so-called bailout is intended primarily to enrich the already rich. To me, that sounds like a cartoon characterization of a complex situation that couldn’t possibly be accurate. On the other hand, a year ago if you told me the entire economy depended on making loans to people who couldn’t repay them, I would have dismissed that too. So I am reluctant to dismiss ideas just because they sound crazy.
Let’s pause here to acknowledge that any governmental action to maintain the health of big banks, and the economy in general, will benefit rich people the most, simply because they have more money on the line. That’s how capitalism is constructed. The relevant question is whether lower income people also gain by the $700 billion bailout.
Viewed in terms of suffering, it seems obvious that rescuing the economy helps low income people the most. A billionaire who becomes only a half-billionaire doesn’t suffer as much as a factory worker who loses his job, or has to pay more taxes, or gets devoured by inflation. So if the price of helping the factory worker is that some rich people get richer, that’s unavoidable under capitalism.
Lately I have been hearing that the $700 billion should go directly to help the people who need it, not to help the greedy corporations. In other words, the government should borrow $700 billion from the taxpayers and then give it back to them. I think that is the kind of thinking that caused the problem in the first place. Unless this is just another way of saying the government should transfer a huge amount of money from the rich to the poor in one fell swoop. If that’s the plan, let’s call it what it is, and debate it clearly.
What seems missing in all the discussions of the bailout is some sort of description of what is likely to happen if we do nothing. Personally, I am not persuaded by hand waving and vague pronouncements of doom. I’d like to see the risk illuminated a bit.
For example, is the risk primarily to a number of big financial institutions that wouldn’t be missed by anyone but the stockholders and employees who signed on for the risk? Or is the failure of those companies just the start of a process that would inevitably cause a great depression? I have no idea.
Does anyone have a link that describes what probably happens if the free market sorts out things on its own?