October 16, 2008
Washington, D.C.–The government has announced that it plans to use $250 billion to buy ownership stakes in various U.S. financial institutions. According to the New York Times, nine major U.S. banks have already been forced into the program. “The chief executives of the nine largest banks in the United States . . . were each handed a one-page document that said they agreed to sell shares to the government, then Treasury Secretary Henry M. Paulson Jr. said they must sign it before they left. . . . ‘It was a take it or take it offer,’ said one person who was briefed on the meeting, speaking on condition of anonymity because the discussions were private. ‘Everyone knew there was only one answer’”–even though at least one institution, the relatively healthy Wells Fargo, wanted to say no.
According to Yaron Brook, executive director of the Ayn Rand Center for Individual Rights, “In herding banking executives into a room and making them an offer they couldn’t refuse, the Paulson regime took its latest and most disturbing step yet on the path to state control of the economy.
“If fascism means coercive state control over nominally private property, then there is no more chilling sign of creeping fascism in America than government’s encroachment on the lifeblood of the U.S. economy–its financial institutions. While the government assures us it will be a ‘passive investor,’ merely funneling cash into the banking system rather than dictating how banks function, this is a lie. Not only does the money come with strings attached–such as restrictions on executive compensation, dividend payments, and the types of investments banks can make–but politicians are already promising a web of further controls. As John McCain recently noted, ‘We will not merely inject billions of dollars into companies and walk away hoping for the best. We will require that those companies be reformed and restructured until they are sound assets again, and can be sold at no loss–or perhaps even a profit–to the taxpayers of America.’
“The Paulson shakedown is the latest in a rapid-fire series of government bailouts and interventions over the last several months. Our leaders claim that this virtual takeover of markets is economically necessary. But it was government control of financial markets that spawned the financial meltdown in the first place: an inflationary boom brought on by the Fed’s easy-money policies, a campaign to promote home ownership that encouraged risky loans, regulations that pushed banks to become dangerously over-leveraged, etc., etc. The response to the crisis should be to restore freedom and to disentangle government from the economy. Instead, the same mentality and the same central planners that created the financial crisis are being given far wider reign to manipulate and distort markets. We must tell our government to reverse this fascist course–now.
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Yaron Brook is executive director of the Ayn Rand Center for Individual Rights. He is a regular contributor to Forbes.com and a contributing editor of The Objective Standard. His articles have been featured in major newspapers such as USA Today, the Houston Chronicle, the Chicago Sun-Times, the Providence Journal and the Orange County Register. Dr. Brook is often interviewed on radio and is a frequent guest on a variety of national TV shows, having appeared on the new Fox Business Network, FOX News Channel, CNN, CNBC, and C-SPAN. Dr. Brook, a former finance professor, lectures on Objectivism, capitalism, business and foreign policy at college campuses, community groups and corporations across America and throughout the world.
To interview Dr. Brook or book him for your show, please contact Larry Benson:
949-222-6550, ext. 213
media@aynrandcenter.org
For more information on Objectivism’s unique point of view, go to ARC’s Web site. The Ayn Rand Center is a division of the Ayn Rand Institute and promotes the philosophy of Ayn Rand, author of “Atlas Shrugged” and “The Fountainhead.”
Copyright © 2008 Ayn Rand® Center for Individual Rights. All rights reserved.
Artificial Constructs in the Economy
9 April 2009 — Eriks GoodwinWhen I sit back and actually think about the artificial constructs in our economy, I’m not sure if the proper response is screaming or nausea. You’re probably wondering what on earth is a “artificial construct.” Well, to put it simply: an artificial construct is a segment of the economy which is not needed nor required in a truly free market. In other words, an industry or segment which produces nothing of actual value– but yet is basically required by law to exist.
Allow me to start with an “easy” example… Americans spend more than $300,000,000,000 to get their income tax returns prepared for them. Can anyone really think that making a tax code so complex that it necessitates such expenditures just to fill in forms can be even vaguely rational? Why not a flat tax? No need to divert all those accounting minds away from things like discovering Enron’s malfeasance BEFORE it crashes…it’s more useful to use those minds to prepare 1040 forms…. Right?
Sticking with taxes… what about all the estate attorneys whose sole job it is to protect your wealth from inheritance taxes? They would not be needed if we eliminate the Death Tax. But, its not like we could use their help in things like advising prospective homeowners about the implications of 18% home loans or reviewing contracts to prevent bad corporate mergers and deals. It’s much more useful to put brilliant legal minds to use working out creative ways to avoid paying taxes… Right?
Think that airplanes are the best way to travel around the country? Worried about carbon emissions? Worried about travel safety? Well, thanks to the Federally funded airport system, most people fly in airplanes… But who cares that a train can move 1 Ton over 420 miles on a single gallon of diesel fuel (the average car can move 1 ton about 35 miles on a gallon of gas). Of course, trains can’t be forced to knock down skyscrapers nor do they make appealing terrorist targets–not to even mention the whole thing about how the train simply stops if the engine goes wonky. But, no one cares about that…. Right?
Then, what about the Federally funded highway system… shall we even discuss the fuel required to move millions of tractor-trailers around the country since a single train can carry the load of hundreds and hundreds of trucks with a single engine? But, Washington knows that we’d prefer to have our roads full of trucks…. Right?
The list goes on and on, but I’ll stop here for now… my point is this: When Congress spends money, it creates artificial constructs in the economy which would not naturally exist–thus de-balancing the system. Why is it so hard for people to understand that Congress and the President can do NOTHING to help the economy– they can only choose to get in the way or stay out of the way. And the whole getting in the way thing hasn’t exactly been a success– just take a look at all the mortgages going bad because the CRE (community reinvestment act) encouraged/forced mortgage lenders to make bad loans all in the name of “equal access”. Well, boys, the piper has come and its time to pay the bill! What else could that money have been used for….?