It was bad enough that four of Georgia’s Congressmen and both US Senators voted for the bailout bill. You and the Libertarian Party of Georgia fought it; we were able to delay it, but the horror passed.
Now, less than two months later, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernake are lamenting that the bailout isn’t working — as if that’s a surprise to any Libertarian! They are testifying before Congress, tapdancing to explain why their plans seven weeks ago were wrong, and why their newest idea — to throw taxpayer money at the Big Three auto makers — is right. (They also are being asked why they used some of the bailout money to nationalize all or part of some banks when they had assured Congress the money would go to buy “toxic assets,” the securitized sub-prime mortgages that had lost so much value.)
There is no question the American (and world) economy is faring badly right now. But Libertarians know that is no excuse to allow the government to get even more involved in it. We believe time will prove the bailout of AIG Insurance and of the selected banks to be a terrible mistake.
Rather than having a logical plan, Paulson and Bernake are responding to rapidly shifting political winds. The trouble is, the Congeressional bailout that the Libertarian Party and you opposed so strongly has given Secretary Paulson plenary power over the distribution of the bailout money without recourse to judicial or agency review. Literally, it will take an act of Congress to stop Paulson from doing whatever he wants with the money.
Now the Big Three automakers are holding our their hands, threatening disaster if they are not given another $25 Billion-with-a-B. We think disaster is much more likely if they are given the money.
While the current credit crunch has caused a short-term cash flow problem for the automakers, that is not why they are on the verge of bankruptcy. For too many years they accomodated unrealistic union demands for salary and benefits that priced their products out of the market; and they insisted on manufacturing vehicles that Americans didn’t want to buy. Be it for quality, gas mileage, frequency of repair, or design, many Americans chose to purchase vehicles made by other companies. And while many of those companies are foreign owned (i.e., Nissan and BMW), most of their vehicles actually are manufactured in the United States. To put it another way, the only reason the Big Three don’t have their legs up in the air already is that the economy was going great until very recently.
Libertarians oppose every aspect of the bailout.
We categorically oppose government intervention in private businesses, like insurance companies, banks, and car manufacturers. Why? Because we believe capitalism is the fairest and most honest economic system ever devised, and the very definition of capitalism is the PRIVATE ownership of the means of production and distribution.
We are outraged that the US Congress has delegated its authority to Secretary Paulson, thwarting the very concept of representative democracy.
Believing as we do in free markets and free people, we believe government should not be picking winners and losers. The Libertarian Party of Georgia platform states “Efforts to redistribute wealth or manage trade through the coercive power of the state are incompatible with individual freedom. Government manipulation of the economy creates an entrenched privileged class — those with access to tax money — and an exploited class — those who are net taxpayers.” The real losers are not potentially unemployed UAW members; it’s the American taxpayers, from whom all government money flows.
Libertarians understand the reality of unintended consequences and perverse incentives. If you protect a fool from the consequences of his actions, all you get is more foolish behavior. Salvaging individuals and businesses from the results of their own incompetance or mistakes is to reward that incompetant and mistaken behavior, and at the same time it tells everyone who behaved responsibly and will not get any free money from the government that they are chumps.
Libertarians believe failing companies have a recourse that does not involve compromising capitalism: bankruptcy. If General Motors files for chapter 11 bankruptcy protection, the company will continue to exist. It will have the opportunity to renegotiate its contracts with the UAW, and revise its health and pension commitments to retirees. Will this harm innocent people? Some (but not all) employees will lose their jobs through no fault of their own, it is true; but that job loss would not be the fault of the American taxpayer, who ultimately would pay for the proposed bailout. There are times when “unfairness” is unavoidable — and uncorrectable. The Libertarian Party Of Georgia platform says “The only proper role of…government is to protect property rights, adjudicate disputes, and provide a legal framework in which voluntary trade is protected.” It is NOT the job of government to repair the mistakes of what Jefferson called “The laws of Nature and Nature’s God.”
