Tony Rubolotta

Repealing the Law of Gravity
November 15, 2008

Aircraft, rockets and hot air balloons do not defy the law of gravity. They use a force directed opposite the gravitational force to achieve flight. Gravity is always there, always pulling and always exerting its influence. You cannot repeal the law of gravity no matter what illusion you may create with flight. Similarly, you cannot repeal economic laws no matter what illusion you create with government regulations and controls. Like gravity, economic laws exert forces that pull the economy of a nation into alignment with reality.

The obituaries proclaiming the end of capitalism and the free market are no more valid than an announcement that the law of gravity has been repealed by the Wright brothers. While capitalism is not a law, it is the economic system most closely aligned with economic laws that reflect human behavior. Socialism is the economic system most at odds with human behavior. Socialists may rant against greed, but capitalism and the free market actually punish greed. Our current economic woes prove this as does the failure of every socialist experiment ever attempted.

The first seeds of the current crisis were planted by politicians driven by greed to retain and increase their power. Democrats in congress aided and abetted by Presidents Carter and Clinton created the high-risk mortgage market and housing bubble that is collapsing around us. They succeeded only because of the greed of people who wanted the American Dream of owning a home delivered to them regardless of their ability to pay or honor their promises to pay. Greed is not the exclusive province of the rich as the poor have so ably demonstrated.

Lenders who wisely resisted making these loans were threatened and coerced by Clinton and organizations like ACORN to make these loans. Fannie Mae and Freddie Mac gave the appearance of insuring greed against failure while the officers and directors of these organizations satisfied their own greed with high salaries and bonuses based on deliberate accounting malpractice. Investment banks bought and disguised the high-risk mortgages for resale to investors so that all could participate in the gluttony. The scheme fell apart because capitalism and the free market, like the law of gravity, were still at work despite every effort to ignore their influence.

The greedy, both rich and poor, borrower and lender, politician and voter, broker and investor, were going to be punished by capitalism and the free market. The greedy pushed the bailout plan to avoid the full brunt of the impending punishment. The bailout plan punishes everyone except the greedy who are going to reap its benefits.

The American automobile industry is no different and wants to avoid the penalty for greed by thwarting the consequences of capitalism and the free market. The UAW wants its greed satisfied by the taxpayer, but they are not the only gluttons at the table. The automakers, regulators and politicians are also responsible and want the taxpayer to literally pay for their mistakes. Democrats, rewarded by the UAW with $400,000,000 in campaign contributions, want to bailout the UAW. The automakers are just along for the free ride. Here too the innocent are punished to rescue the greedy and incompetent.

The pattern is emerging and it should be clear that businesses and unions that have aligned with the Democrats will be spared the consequences of their greed and mismanagement. The line forms to the left and will lengthen. The money appropriated from the innocent will disappear in a rising tide of bailout plans and stimulus packages. The corrections demanded by capitalism and free markets will only be postponed and the consequences magnified.

Leftist pundits can declare the failure of capitalism and free markets all they want, but the hot air they generate will not keep the economy afloat indefinitely. It will crash to earth once the greedy have milked it for all they can and the innocent have nothing more to give. Had capitalism and the free markets been allowed to work, had the bailout plan not been passed, had the greedy been silenced by voters using common sense, a just and bearable correction would have been made.

The economy will not recover in the next two years but will worsen. The socialist economic policies we can expect from the Obama administration will reward greed, sloth and mismanagement and punish those who do not embrace these vices. Compounding the problem will be a growing federal bureaucracy of regulators intent on meddling in business to advance a socialist-environmental agenda. The inevitable shortages will appear, pressure for wage and price controls will be exerted, government demands for taxes will increase, unions will decimate businesses, media propaganda will flow to misinform the public and false economic gurus will rise. All we can count on is that the law of gravity will not be repealed. The descent has just begun. Fasten your seat belts.