Look long term, not short

Here's the real problem with the bailout plan. It's not about any moral hazard of saving the companies/corporations just because they're so crucial to the economy (although I do agree that it's morally wrong). It's not about requiring the American people to support the bailout via their tax money (personally, I believe that citizens have the duty to support their country whether they like it or not; if not, no one told them to live in that country in the first place). The problem is that people are looking into the short term and not into consequences further down the road. And, in doing so, they're failing to trace the cause (I decided "put the blame" would be a fairly inappropriate way to phrase that) to the right source.

By approving the bailout plan, we'd be supporting more governmental control in the economy. Would we, then, actually be sacrificing our freedom for security? One of the so-called "fundamental American values"? Even if we did that (the US losing its tag of the democratic and free nation in the process), that still doesn't solve the problem. Short-term security almost never translates into long-term stability. By generating sufficient funds to support the bailout, further inflation would result, and we all know what that's going to do to the already-spiraling US dollar. With a weak dollar, what would happen (besides the Europeans laughing at us) is the world economy being seriously affected.

Not to mention, again, that freedom would be sacrificed for a short-term security measure that would be disastrous in the long term.

(A very animated) Ron Paul seems to share the same view: http://www.youtube.com/watch?v=YBVB1Uc0nko


Kevin Walton said...

While I do share your fears of a government being overbearing, Vince, I think that the bailout is necessary. When the House rejected the bailout plan, the markets all plummeted. I fear that any more rejections will just have the same effect: markets continuing to decline until we reach a "great" depression. Thus, in order to save ourselves from mass unemployment, rising inflation, no consumer confidence, and zero loans given out, I feel as though the bailout is now necessary. I only hope, though, that the new bailout bill will contain measures that will not allow the Treasury and government to abuse control.

Vince Siu said...

Well, I'm glad you hold an optimistic view of the bailout bill, because it certainly will not contain such measures. What the government will presumably be trying to do through this bailout plan is to gain stronger control over the market/economy in order to "prevent any similar scenarios in the future," and that almost by definition means a heck of a lot of control on both the Treasury's and the government's parts.

Kevin Walton said...

If that is what it takes, maybe it will be good in the long-run. If no (or little, as most people would argue) government intervention leads to this, a complete financial crisis, then maybe some government intervention would be good. It may be worth the shot, especially after today's market performance.