Stop Bailing Out Failing Companies
Stephen Moore was the keynote speaker at the chamber of commerce annual meeting I attended on Tuesday. Mr. Moore founded the Club for Growth in 1999 and is currently the lead economic writer for the Wall Street Journal. He worked with Reagan and Bush Sr and is currently being consulted by the Terminator on fixing the budget problems in California.
Economists don’t often make engaging speakers. Mr. Moore threw plenty of charts and graphs on the screen for us to peruse but kept the presentation light enough for any non-economist, yet relevant enough that only the ignorant partisan could ignore.
The thrust of his message was simple: if you own a business, are willing to get out there and compete, and believe that the free-market system has created the most prosperous and innovative nation on earth and the greatest level of wealth history has ever seen, then you must work to end the unparalleled level of government interference in that system that we are now seeing.
Mr. Moore showed charts of data going back to the early 1900’s. The correlation of prosperity and low tax rates, inflation and increases in money supply, economic trends and political party control of government was unmistakeable. One just can’t ignore your head, and favor your heart, when looking at the numbers and laying blame for our current dilemma – and even more so fearing the cure we are being fed as the only way to resolve it. The ’scariest’ graph was the one showing that the US money supply has grown 40% in the last 6 months! When the economy turns around, we are facing an inflationary spiral that makes Jimmy Carter’s 21% interest rates and stagflation look like a walk in the park.
Ladies and gentleman, the market system works. Greed gets squished, needs are met, and constructive destruction - the process of shedding the old and replacing it with the new and more efficient – keeps the economic system healthy. Companies that don’t redevelop themselves will be supplanted by those that do. When paradigms change, everyone goes back to zero and your previous advantages are of no help in maintaining your success. The process is not without localized pain, but the greater system operates most efficiently for everyone.
We must get angry and loud. We cannot sit back out of fear and let the politicians continue to solve individual credit problems with a societal credit card that we’ll never be able to repay. If we let the inefficient fail, labor, suppliers, and especially customers will gravitate to the successful and we will all benefit. It is nonsensical and immoral for the government to take money (taxes) from successful businesses and homeowners paying their bills and give it to failing businesses and individuals who aren’t meeting their obligations.
