Lies the government told you by Andrew Napolitano (best e reader for epub TXT) 📗

government does not produce wealth, it only transfers resources and consumes wealth, that someone else who had the money will be driven to spend less. So the only gain is for those who receive that money, who, as has already been aptly proven, are not too good at knowing how to spend it. And an examination of the wish list received from cities around the country illustrates that no one seems to know where it will go. Requests include two million dollars for more neon signs in Las Vegas (of all places), three million for an environmentally friendly clubhouse, six million for waterslides, almost one million for a Frisbee golf course, and even Harley Davidson motorcycles for the police.13 The money and how it is to be allocated are still in question. Some of the various projects that have been proposed will create jobs, as did the digging and filling of ditches during the reign of FDR, but whether they can create prosperity is out of the question.

It is the capitalist market that has proven to be the best allocator of resources. Many considered Lehman Brothers, one of New York’s largest investment banks, too big too fail. Yet fail it did. In January 2008, the bank had assets of $639 billion and over twenty-six thousand employees, but the government let it go. Within a few days, the market had allowed the viable Lehman pieces to survive, and the rest were washed away.14 That is how the market works, and the only way to ensure that the rest of the available resources are allocated to end this bust as quickly as possible is to stop any government intervention, allowing any firms that must fail to fail, and to do so quickly.

Any bailout, as in the case of AIG (where currently, executives largely responsible for its near-bankruptcy are to receive $165 million in bonuses),15 will only result in creating a monster that will have a terrible impact on the future of the economy. If the executives are getting paid the big bucks to fail, why would they make any attempts to succeed? The longer a business that squanders money and profits is allowed to stay open, the more damage will be visited to the market and therefore to viable and profitable companies, which could otherwise fill in the gap that would be left by the closing of such companies.

From Too Big to Fail, to Too Public to Succeed

The claims by the government that the companies it bails out will return to private ownership after they stabilize is a well-known government deception. History has many such stories of companies in trouble that the government “rescues.” Once government bureaucrats get their hands on a certain industry, they cannot let it go.

The strange thing is that Americans really do believe that the government can fix the problems in the private sector, because they believe that it is the greed of capitalistic businessmen that brings the market down, and so only the forces of a not-for-profit government can bring the market back up. People seem to have forgotten the disastrous result of a centrally controlled economy that was the Soviet Union. This government deception has been fed to us for so long that it has become an accepted fact, without any basis in actual reality.

This pervasive myth leads to the situation in which a libertarian may argue for the privatization of some part of the public sector, for example, utility companies, and the general population is shocked and awed that anyone would even contemplate such a thing. Professor Murray Rothbard once made a great analogy, noting that if the government had a monopoly on shoe manufacture and sale and had been providing shoes for everyone from tax revenues, then anyone who proposed that shoe production be privatized would get the same reaction. People would cry:

How could you? You are opposed to the public, to the poor people, wearing shoes! And who would supply shoes to the public if the government got out of the business? How many shoes would be available in each city and town? How would the shoe firm be capitalized? What material would they use? What would be the pricing arrangements? Wouldn’t regulation of the shoe industry be needed to see to it the product is sound? And who would supply the poor with shoes?16

Because the government’s own mythology has become so predominant in our time, most really do believe that if the government has been providing a monopolized service, no one else could or would want to do it, unless the new producer charged exorbitant amounts. Yet, all Professor Rothbard was attempting to prove was that the capitalist economy can handle itself, and it can do so better than the government because businesspeople have to answer to their customers and investors, and if they do not provide the product that customers want and bring a return to investors, then competition will wipe them out.

The government has no such worries. For one, since there is no relationship between product and payment, the government needn’t worry about not getting paid for the product. It also does not have to worry about competition, because it has effectively banned anyone from competing with it. And, of course, the government never needs to impress investors when it wants cash. It just raises taxes, which we pay like sheep, or it prints money, which devalues all previously printed money.

Government Motors

There are many who argue that the Bush and Obama bailouts were the only possible solutions to ensuring that the economy did not collapse. On the other hand, as former British Prime Minister Margaret Thatcher once said, “The problem with socialism is that sooner or later, you run out of other people’s money,” so some firms need to go down because they are no longer functioning effectively in the market, and the government is just throwing good money after bad.

Some of these are lucky, like General Motors, which has now become Government Motors, with the federal government