From time to time I post guest blog entries submitted by readers. Email me if you are interested in writing a guest blog entry. Posting your entry is not an endorsement of your views. Just because I post an entry it doesn't mean I necessarily agree or disagree with a writer. For example, this guest blog entry has demeaning attacks on government workers. I don't think the language helps Martin's argument at all. But it is his argument, not mine.
Here is the latest from reader Martin Breen:
The Prime Directive
My view of capitalism is born from the school of hard knocks -- where success and failure are important to each other as the earth and sky. Perhaps capitalism is not for everyone, and, at times, it may seem cruel and inhumane. However, it is the best system that we have as all the others, such as communism and socialism, have caused far more cruelty and suffering. Indeed, our democratic capitalism, the one espoused by our founding fathers has laid the foundation for the greatest rise of a nation in the history of the world. Put simply, capitalism has led to the greatest two hundred years of economic prosperity for anyone willing to pick up a shovel or imagine the next great innovation.
However, at current, I wonder if we haven't so perverted our capitalistic system that it can never be repaired. I am reminded of the television series, "Star Trek," and the Prime Directive of Star Fleet whenever visiting a new planet or civilization. Namely, that Captain Kirk and company "could not interfere with the internal struggle of the civilization and alter its natural development." In other words, Star Fleet must stay neutral and allow the new world to succeed or fail on its own merits. I cannot help but think that this has always been a decent metaphor for capitalism and the silent, neutral hand of free markets. At its core, our country was built as a meritocracy; we should not be so quick to give up on it. But, of course, that's not what our Government, our elected, representative democracy has done. Instead, it has decided to violate the Prime Directive and forever interfere with the direction and history of capitalism. And, perhaps there will be serious and unintended consequences.
I might suggest that the capitalism is analogous to nature. They are both highly complex and closed systems that work as long as no one changes their course (btw - this is not an argument against regulation). Yes, there will be storms, hurricanes, and volcanic eruptions that change landscapes and affect people's lives as sure as there will be recessions, depressions and business failures that will reshape the economic landscape. But to attempt to duplicate either of these systems would be nearly impossible. Can you imagine if the government had to control every aspect of nature? Would you even know where to start? How is it any different when we talk about capitalism? Didn't the fall of the Soviet Union teach us that artificial economic markets could not be sustained by mankind? At least, not without intense human suffering and the creation of the same kind of classes ultimately created by capitalism.
I might also suggest that the current crisis is so complicated and nuanced that only the best and the brightest should even consider jumping into the fray. There are, however, many who will state that it is the best and brightest that got us into this mess with all their so-called mathematical and derivative formulas. And while this notion is, of course, in part accurate, I think it was excessive risk taking that started our problem. And, this also goes to my next point. If a genius educated at our best schools with an I.Q. over 150 cannot figure things out, how do you suppose the typical government worker, the "C" student with a 110 I.Q., will meet this incredible challenge?
From top to bottom, the government is just not equipped to handle this current financial crisis. This is especially true, if they believe that they can outthink the markets. A recent dust-up may prove my point. AIG, the world's largest insurer suffers staggering losses and the managers responsible for it all claim they are entitled to nearly $165 million in bonuses and other compensation. The American people and President Obama are rightly outraged. But guess what folks, if the government did not step in and save AIG, these bad managers would have gotten nothing since AIG would have gone out of business and no one would have gotten anything, but the door. More fundamentally, it was the perversion of capitalism that created this odd result.
I will quote Thomas Jefferson because he is one of the primary architects of our democracy (republic) and every American should reacquaint themselves with his writings. Jefferson once said that "a wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor and bread it has earned - this is the sum of good government." Jefferson certainly would agree that good government should adhere to the principles of the Prime Directive.
Here, it should be axiomatic that you cannot fix a leverage problem (i.e., borrowing too much money) by borrowing more. Indeed, borrowing so much, that you don't have enough paper to print the new money. Did you get that? We are printing so much money that we don't have enough paper to fill the orders. And, more importantly, we are not borrowing from ourselves, or even the Chinese, but our children and their children. Who are we to bind these future generations to such uncapitalistic decisions? Quite frankly, my as yet unborn grandchild may not want to lend me this money. In fact, since bad lending decisions, loaning money to folks that really couldn't afford the payments, created this current crisis, we would not even qualify to get these loans from our grandchildren. We are certainly a credit-risk and not worthy of a $3 trillion dollar loan, even from a family member.
So how do we fix the current mess? That's the beauty of the nature of capitalism - we do nothing and it will ultimately fix itself. Give the recent wildfires a chance to reseed the hillsides and you will see that the grass will grow again. In economic terms, let those that took on excessive risk and failed, fail. Let merit mean something again in America. Not everyone has to win every game and every race. Indeed, if everyone wins a race, then no one has really won at all.
I know it seems scary and callous and the talking heads keep warning you about this disaster or that one, but failure is the only way to ensure future long term growth. I mean think how arrogant it is to say that companies are too big to fail. Do you really think the United States is too big to fail? Keep bailing out bank after bank and company after company and printing money like health gym windshield flyers and see if we are not too big to fail? Actually, please don't.