The Motley Fool's worst idea yet, part II
There's some trouble in saying that you want the government to own the banks for the short term only. And that is, who is going to make the government divest? Voters? I'm not positive, but I would be willing to bet that voters will be thinking about other things 5, 10, or 15 years from now, or whenever we now think will be the right time for divestiture. The historical fact is that when any government anywhere gets more power or more stuff, they find ways not to give it back.
This is from the bailout side, which accuses us on the non-bailout side of being naive. We're not saying this is going to be fun. We're saying that what's wrong is wrong, whether or not it seems to save people some pain. Also, huge corporations failing has often proved good for the economy.
Also, some are saying that letting "Big Lending" fail will hurt the consumer. That means less spending, and that hurts the economy, right? Wrong. Less production and investment hurts the economy, but spending is at least as wasteful as it is helpful. Saying that someone paying someone else to do a particular thing helps the economy is like saying that war helps the economy. That ignores the possibility that the seller (either a gun-merchant or a toy-merchant) could be doing something else.
Supply and demand are about to correct the massive imbalance between productive labor and consumption that we have in this country. It doesn't take government regulation of credit cards or anti-predatory lending laws. It just takes a few big financials going bankrupt, thousands of their employees having to get other, more productive, lower-paying jobs, and everybody working harder in relation to their standard of living. In other words, it takes all those BMW-driving yuppies starting to live like the rest of us.
Do we know what it's going to be like living without credit? Well, yes. That's pretty close to what we've been doing. Do we know what it's going to be like with 8% unemployment? Yes, we've been there before, and we came out of it pretty well and pretty soon, unless we had somebody bailing companies out and saving the economy.
This is the political equivalent of panic selling. Instead of selling stocks, though, you're selling out the economic freedom of the United States.