The Motley Fool: This Should Be Your Position On The Bailout
True story: A young lady once went to the doctor complaining of weight gain and fatigue. She was a light eater and always very thin and active. The doctors were confused but they had to do something. They started to treat her symptoms individually, prescribing medications and running test after test. With each passing month, new symptoms emerged. More tests were run. More medications prescribed. Within a year she was on fourteen daily pills. Finally, she met a doctor that wasn't a total quack. He diagnosed her illness properly, treated it, and I am happy to say that she is on the way to recovery. It turns out that the original doctors actually created more problems by treating the symptoms without understanding the cause. Had she continued to leave her life in their hands, who knows what kind of damage they could have caused.
When it comes to the bailout, The Motley Fool has joined the chorus of quack economists that feel compelled to do something, without understanding the true cause of our economic plight. Now before we diagnose the underlying problem with America's economy, let's take a moment to think about TMF's current position as outlined in many articles, including Bruce Jackson's most recent.
Let's analyze TMF's logic (and the logic of the media and government): We can see that something is terribly wrong. We see the symptoms of this illness: contracting GDP, layoffs, failing banks. Something, therefore, must be done. We know the bailout is a bad idea, but doing nothing is not an option.
Allow me to show you the faults of this logic through an analogy. Let's say you were sitting on a mountain of cash. You know that you have to invest it or spend it in some way, as sitting on idle cash for long periods of time is detrimental to yourself and to overall productivity. Yet after a look at the stock market, you see that every company is overvalued. Investing in stocks is just a bad idea. Yet, armed with no alternative that you can think of, you plough ahead, determined to do something. Of course, you wouldn't do this. It's a bad idea, and as Warren Buffet has said, the beauty of investing is that you don't have to take the bat off your shoulders.
Maybe you feel that analogy is off base. After all, holding cash is not a terrible thing like watching the economy plunge. Maybe so, but the principle is the same. Taking the time to understand the problem and making the right decision always trumps doing something for doing's sake.
The Motley Fool writers, almost all of them, agree that the bailout is a bad idea but the best option. I disagree. No bad idea is ever an option! Instead of opposing the bailout, yet supporting it due to a lack of alternatives, The Fool's writing staff could spend their time investigating the cause of the disease, rather than submitting to the evil treatments.
For those who believe doing nothing is worse than doing evil, your position seems absurd. If I told you that killing poor Johnny was the only option, and doing nothing is not an alternative, would you allow me to decry you as a fool because you didn't have a better idea? Of course not. You'd want to know what Johnny had done, what caused his behavior, etc. You would certainly to take a deep breath, exhale, and think of other solutions.
Such an approach should be The Motley Fool's position on the bailout. It is evil, and we do not support evil just because we can't think of a better solution. Let's take a deep breath, exhale, and begin the work of investigating the root cause of our problems. Then we can properly treat the symptoms without causing any more damage to our patient.
I began to discuss the root problems in an earlier post. Austrian School economists have spilled a great deal of ink about the root causes of the economic meltdown. You may not like agree with their analysis, but at least they're trying to identify the root cause. Furthermore, you may not like the solutions they offer, but you should never support evil simply because you feel that doing nothing is not an option.
Promoting evil simply because you see no viable alternative is still evil. The Motley Fool staff needs to do some soul searching. They need to take a principled stance against government handouts. They need to take a deep breath, exhale, and start diagnosing the cause and offering viable solutions.
David in Qatar