Chavez is Jealous of Paulson’s Powers

The new buzzword is “intervention.” The U.S. government “intervenes” in the market to save it. The reality is that the government is buying or nationalizing companies, and this is customarily done by totalitarian regimes. Chavez bought or nationalized energy companies while they were solvent. Bush is buying companies or investing in banks when they are insolvent. The net result is the same: the government owns the companies. And once the government owns the companies, it can reap the profits and can choose its business partners. In the free market, it’s who you know. In a government-controlled market, it’s who you know in the government.

You may be wondering how a government with $10 trillion in debt can afford to buy insurance companies such as AIG? Isn’t the government’s credit card maxed out? Aren’t creditors calling the government and threatening to repossess the Lincoln memorial? Well, the government never runs out of money, because it can create money. Due to the myth that we must have an ever increasing amount of money to match the increasing amount of production, the government constantly prints (or digitally creates) money. It uses the newly created money to fund government operations, purchase military supplies and, now, to purchase bank stakes.

Now, at a time when most companies are broke, only the government is flush with funds and can buy any company it chooses. As companies go bankrupt, the government steps in to buy them and seems like a savior. But then we’re faced with government-owned companies like Amtrak that provide poor service at high prices, while our ticket prices pay high salaries to employees and contractors. Do you think AIG or Fannie Mae or Freddie Mac will be well run? Or will they be used to provide special benefits to special interests at the expense of you and me.

The government should let insolvent companies fail. Other companies will provide services to the customers of the former companies. Life will go on, and we won’t have a totalitarian economy. If you think Bush is a bad president, think about having him as your manager.

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