Remember the Constitution?

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I'm having
a hard time swallowing much more of the ridiculous television programming
regarding our current economic crisis and the government's fiasco
of a stimulus.

If I have to
hear one more economist or executive editor of some financial rag
or former Wall Street insider address the merits of the government's
stimulus using double talk, armchair economics, half truths and
massaged statistics I'm going shoot my cat.

They all babble
about how it will create jobs, unlock the credit markets and stimulate
investment. Horse-hockey.

I don't understand
how these self-proclaimed financial insiders can go on television
with a straight face and lay out this crap.

No financial
measures or calculated metrics are needed to analyze the situation.
Any such numbers would favor the party presenting them anyway and
thereby be biased by association.

Here's the
problem so even those mental midgets on CNN can understand it: there
is nothing the government can do with our money to legally stimulate
the economy except let us keep it! Here's why:

Firstly, there's
a seemingly irrelevant, historical document sitting in the National
Archives in Washington called the constitution. It's the document
that Ron Paul referred to many times during the Republican primary
debates that usually evoked a condescending chuckle from the likes
of McCain, Romney, Giuliani, Huckabee and the other Manchurian candidates.

Nowhere in
that document does there exist clear constitutional authority for
the federal government to tax the people and redistribute those
monies to the markets of their choice.

Secondly, the
whole charade is a wash: if Uncle Sam takes money from me in the
form of taxes, or debt or inflation that I was going to spend on
having my lawn cut, and gives it to you so you can have your car
washed then there are no new jobs created. The young man I would
have hired to cut my lawn loses the job, and the one that washes
your car gains one. Zero-sum game.

Thirdly, there
is nothing that the government can do on my behalf with my money
that I can't do better. Anyone who has ever worked for a large corporation
or a state or the federal government will attest to the blatant
inefficiencies associated with it. It's just not logistically possible
for the government to act as a central planner for our economy.
To think they know what, who, where, when, how much to invest so
as to better our lives. Besides, hasn't that been tried before and
failed miserably? Wasn't that Communism?

Fourthly, the
insertion of the government in-between businesses and consumers
creates the opportunity for businesses to lobby (bribe) the middleman
and get special interest treatment. Lobbying directly to the consumer
without the government is called marketing. The benefit to the consumer
is a quality product. Lobbying with the government in the middle
is called special interest pandering and the benefit to the government
is cold hard cash in hand and there is no benefit to the consumer.
Only corruption and higher prices.

A firsthand
example: a former colleague of mine who was recently laid off told
me today that he has been fortunate enough to find a new job in
this troubled economy but for significantly less money and he still
has to incur significant relocation costs, and his family will not
be joining him immediately so he'll have to support two households
for the time being.

He called his
bank, Bank of America, to try and negotiate a lower interest rate
on his credit cards in hopes of some short-term relief. He explained
that given the current economic climate that given the decision
to pay the rent or his BOA credit cards that naturally he would
pay the rent and therefore would appreciate BOA working with him
to find a solution that benefited both him and BOA.

to Reuters
, BOA received $25 billion from the Treasury Department’s
Troubled Asset Relief Program (TARP) in October 2008 and again on
January 16th, 2009 the U.S. government gave BOA a $20
billion bailout and a guarantee for almost $100 billion of potential
losses on toxic assets. These bailouts made Bank of America the
biggest recipient of taxpayer money next to Citigroup.

in the day my colleague tried to use one of his BOA credit cards
and it was declined. He called the bank only to find out that his
credit card accounts, which had been in good standing for 2.5 years,
had been closed!

After calling
the bank and speaking to a "credit specialist" he was
told that his credit worthiness had been re-evaluated and found
to be a higher risk then previously thought.

More horse-hockey.

What incentive
does a bank like BOA, which has received almost $150 billion from
the U.S. government, have to negotiate with Joe Blow over $10,000
in debt? None!

The government
intervention, as usual, gives institutions such as BOA incentives
to make bad business decisions. Would you or I do differently with
that kind of safety net from the U.S. government?

26, 2009

Don Cooper
[send him mail] is an economist
living and working in Atlanta, Georgia.

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