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repealed by the Wright brothers.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.