The Bailout That Broke The Camel’s Back

or From The Prudent To The Profligate: A Nation Of Deadbeats

This is an excellent ReasonTV discussion about the financial bailout and the high level of frustration that the economically literate are feeling in response to it. Tim Cavanaugh has a great line where he points out that the bailout redistributes wealth from “the prudent to the profligate.” And again where he says this bailout was “perfectly designed to punish the just and reward the wicked.”

One of the major issues that frustrates economically minded people is that the media portrays them as ideologically motivated, or worse, unserious when it comes to this bailout. The media has almost wholly supported the bailout from the beginning, and the issue was portrayed by them as the government having no choice but to swoop down and clean up the “market failure” of the private sector; whereas economists and other informed people tried to explain that this bailout was just a poorly designed attempt to stop the free market from naturally adjusting to problem caused mainly by government intervention in the first place.

Despite all the negativity and frustration, Len Gilroy makes an upbeat prediction that I really hope comes true, but I fear probably won’t. He says that because of all this financial trouble, the era of cheap money is over for state and local governments. Combine that with the fact that it’s going to be near impossible politically to raise taxes and we may have the perfect storm for free market based policies. There is already a huge interest in privatization of roads and bridges and such and it’ll only increase as governments start to realize they need much more money then they have available. Hopefully, as that privatization is obviously successful, it’ll open the door for more market-based policies in different areas of government. It may be the silver lining to this, the worst economic disaster in United States history.