If our fiscal tailspin teaches anything…

…it’s that capitalism cannot coexist with a corrupt political system.

             

By Jack E. Lohman

Clearly, politicians should not have taken the first step… taking cash bribes and agreeing to deregulation of banks in return.* That was a major catalyst in driving our economy into oblivion. Even conservatives can’t be happy with that.

If we are lucky, politicians will realize that we are out of blood and change their ways, but it’s not happening yet. Reliable reports are that $50M to $150M of the recent AIG bailout has been targeted to CEO and executive bonuses, all while politicians posture in front of the cameras.

Indeed 80% of CEOs are decent folks, but the remaining 20% need heavy regulating. As are 80% of Americans hard working, with 20% needing tough love, and 80% of home buyers well meaning but 20% acting irresponsibly. The 80-20 rule is at work, though it’s the reverse for politicians.

A “regulated” free market would have served us better than “whatever you can get away with.”

Billionaire (and liberal) Herbert Sandler said it best: “I am deeply opposed to wealthy people who exploit the poor, powerful people who prey on the weak, and government representatives who betray the trust of the people they supposedly represent.”

Thoughtful conservatives would likely agree.

Political corruption fueled the deregulation of the housing and credit markets, allowing sub-prime mortgages and variable rate loans to suck in the gullible with the able help of greedy mortgage lenders. Then the bubble burst, all while the fat cats got rich and passed even more cash to America’s board of directors: Congress.

Disgraceful is the word for our political system, and though it resulted in a large political turnover nationally, Wisconsin re-elected 100% of our representatives. Go figure.

So now that the federal government has a financial stake in banks, a law must be immediately passed to prohibit politicians from accepting campaign funds from all of these quasi-government entities, and from all private entities receiving loans or bailouts from the government. No-brainer? Yeah, but look at who we’re dealing with.

And so the banks are not lending money. Then our $700 billion should instead be used to establish a taxpayer-owned lending agency, then let the private banks catch up. And use part of it for universal health care, which would bail out 100% of our corporations to the tune of $6000 per employee per year.

Any GM bailout should consist of a chapter 11, then the taxpayers buying 80% of their stock, reorganizing, eliminating golden parachutes and firing the CEO, and then reselling our taxpayer stock to private investors at a profit. How’s that for tough love?

You’d think we’ve hit bottom, but we haven’t. Paulson is getting a free ride, and we’ve still got politicians taking money and rewarding their contributors. That will continue until we pass public funding of campaigns, a daunting task as long as they benefit from the corruption.

Can you imagine the firefighters in California being paid to not put out the wildfires? We have essentially that with our politicians taking money from industry.

No society can survive a corrupt political system for long, and for America it’s just a matter of time before it takes us down. Other countries have been corrupt longer and have already failed. The current recession should be our wake-up call.

See House and Senate votes on the deregulation.

11 Responses to If our fiscal tailspin teaches anything…

  1. Harold says:

    You are in good company. Now John Torinus supports the GM bailout too.

  2. Yeah, but Torinus also supports outsourcing our healthcare to India, and high-deductible insurance plans that have already driven up hospital bad debt, and promises to trash our healthcare system. He and I disagree strongly on this issue. Healthcare costs should not be transferred to employees.

    He also has 250 employees in the auto supply business, so I understand his concern.

    Make no mistake, this bailout is yet another transfer of wealth from the taxpayers to the wealthy CEOs and investors that made a mistake and now want the taxpayers to bail them out. And our politicians are right behind them with their hands out.

    GM doesn’t need a bailout, it needs to be nationalized, reorganized, and then sold to private investors.

  3. And let me add, can you imagine what we’d have had Bush been allowed to transfer our Social Security to the Wall Street private sector??? Yeah, it probably would have delayed the crash but when the crash did finally occur it would have taken everything! That’s what I like about politicians.

  4. Ken Van Doren says:

    Jack;

    There are apparently many who believe even enforcement of restrictions against force, fraud, misrepresentation are contrary to a free market. I know of NO advocates of free markets who subscribe to this “progressive” fiction.

    To say that the market meltdown is due to deregulation is at best ignorant, or dishonest. The Community Redevelopment Act MANDATED making marginal loans at the risk of banks losing their charters. So Barney Frank, Chris Dodd and other fools who helped CAUSE the current situation are doing all the can to ignore their part in the failure while selling the public a bill of goods while making political hay in a situation where they should be held accountable for their blame and subject to retribution.

    There is ONE bit of regulation that would make most other regulations unnecessary. How about a rule saying that “Thou shalt not loan money that thou doest not have?” Yes, the banks are legally (but unconstitutionally) counterfeiting our currency with many ill effects, most of them upon the poor and middle classes. One of the best educational peices I have seen on this subject is this video from the Mises Institute:.

    Money, Banking and the Federal Reserve
    http://video.google.com/videoplay?docid=-466210540567002553

    And as to CEo’s making obscene amounts of money, 2 things. The legalized counterfeiting system helps transfer wealth from those who produce to those who manipulate the money supply while producing very little. Do you think that Secy. Paulson would have made $640 Million in a truly free market? (His salary at Goldman Sachs in 2006)

    Perhaps this is one bit of regulation we can agree on:
    And there needs to be enforcement of the one share one vote principle. Regulations protect boards of directors from their owners. Again, contrary to the free market.

  5. Clearly, Ken, deregulation by itself is not the only bullet that felled the economy, but political corruption is. You are absolutely correct that the Community Redevelopment Act was a major contributor. The Dems are more at fault on that one, but the R’s made up for it elsewhere.

    My point is that deregulation in general — where congress has essentially turned a blind eye to all forms of corporate regulation — has allowed industries and their executives to rob the people blind. All of this due to one issue: political corruption fostered by campaign contributions.

    It is funny (sad) that we ridicule other countries for their corruption, yet we ignore the very politicians in our own congress, both Republicans and Democrats, who are no better and sometimes even worse than their foreign counterparts.

    As for Paulson, I trust him as much as I trust Bush. They are both inept at best, crooked at worst. I’d sure like to know how they each benefited financially from this bailout.

    Will honest politicians bring utopia? I doubt it, but at least we’ll not be rowing upstream.

  6. ezag says:

    Governments have a role to play. But that role should always be viewed skeptically. Why? Every government action opens the door to potential corruption and inefficiency. The idea that a few new regs or better administration will end corrupt practices is not supported by reality. The rats are relentless in their drive to steal the cheese from the public or the government. All politicians are subverted to some degree…otherwise they cannot garner the support to stay in office.

    Tax and spend must be subjected to a major constitutional overhaul that restricts the action of government.
    Z

  7. I would sure like to believe that we don’t need govt regs, but the reality of today’s economy tells me that we’d have been better off with more regs than fewer. Govt bureaucrats are often maddening, but they are generally not corrupt. They can go to jail, but the politician’s corruption is written off as campaign contributions. Get the campaign contributions out of the system and your “tax and spend” will become a thing of the past.

  8. Radu says:

    “GM doesn’t need a bailout, it needs to be nationalized, reorganized, and then sold to private investors.”

    Why do you think that the government will do a better job at reorganizing GM than the free market. We need to stay away from an industry that has grown inept and can no longer run itself efficiently. Any bailout out of the big three will just turn them into the next Amtrak, they will forever rely on the government. there are next to zero cases were a company has taken government funds and become more competitive.

    What we should do is bailout out all of the retirees that are living off there GM pension. Giving taxpayer dollars to large corporations is a horrible precedent to set.

  9. If the taxpayers are going to pay for anything it should be a universal healthcare system which would save GM and every other corporation in the US $6500 per employee per year. That’s what I call an appropriate bailout.

    But No, I don’t trust private industry to fix the problem that private industry caused. Frankly, I wouldn’t mind seeing GM go chapter 7 and sell off its profitable lines to Ford and Chrysler. But I also don’t like the privatized retirements GM employees have, because the taxpayers are going to be stuck with them too. Just as we’d be stuck with privatized social security.

    That said, after all of the political posturing by the Dems, they are going to get their money.

  10. Radu says:

    leaving the mess of universal health care aside (why you bring this up I am trying to figure out).

    “I don’t trust private industry to fix the problem that private industry caused.”
    The only problem with private industry is that they are no longer profitable. Private industry did not need to create this problem for it to exist, consumer preferences or the discovery of better production methods are more likely to be the culprit. If the government stays out of it than the industry will shift to the consumer preferences and the most efficient production methods, only when the government becomes involved do these things “fail”.

    Please elaborate on how we would become “stuck” with privatized pensions and social security, in particular how we would be more stuck than the current system.

  11. Leave out universal health care? When there are more Big Three cars made in Canada because they have universal health care and we don’t? Because their health care costs employers $800 and ours costs $6500 per employee per year?

    Because Sir, that’s what you call a government bailout. But one that works for both the people and the companies. ALL US companies, not just a few.

    In case you haven’t been watching, it’s the free market system that has failed. We are now in a mode of socialism. And if the carmakers fail to come up with the cash, it will fall to the taxpayers, either through a bail.out or having the workers going on the public dole. It’s called food stamps and Medicaid.

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