We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
The only way the economy can heal is through the market. However painful the healing process, only the market can bring about full recovery. Government cannot do it. Friedrich Hayek offered a remarkable explanation of this in The Fatal Conceit. He wrote: “The creation of wealth is not simply a physical process and cannot be explained by a chain of cause and effect. It is determined not by objective physical facts known to any one mind but by the separate, differing, information of millions, which is precipitated in prices that serve to guide further decisions.” In other words, wealth is created by the market. Hayek further warned: if you do not trust the market, then you no longer believe in freedom or capitalism. In that event you are a socialist on the road to serfdom.
WHAT? I'm shocked to see that there is gambling going on with my tax dollars!
That is what government spending is - gambling. Gambling is a zero sum game in which there is no net improvement in the overall size of the pie in question. If you are at the table, that is the size of the game, and chances are you WILL lose your money, no matter how good you think you are. The only way to grow the gambling pie is to include more people at the table, but as most gamblers know, the table is limited.
The ONLY net gain of gambling is a non-quantifiable feeling of entertainment and enjoyment among the players (but mostly the winners...which the government gets to choose).
Private economy, however, produces value by creating an overall feeling of well being related to the need or desire for a product based on its availability or utility.
Cars are very much a day to day utility today for the average person...so they are very valuable. But if too many are created (the market needs 10,000, so we create 30,000), then the value of a car will drop due to oversupply.
If the car is not meeting the needs of the average user (let's say a Hummer in June 2008), then its value will drop because people won't want it.
When the government CONTROLS these things - what you can have, and how many there are - it does not create value. It forces it on people, usually against their will. The market is NEVER wrong, though it is sometimes misguided. The government is rarely right, and is always misguided.
The market takes information and proactively distills it - how much production is needed, how do we distribute it, how do we price it - so that it can meet the needs of users.
The government REACTIVELY assesses situations and provides cover to areas of weakness based on an areas ability to make its "needs" known.
It's clear value cannot be created by the government. Government is dead weight loss in economic terms. It CAN "prime the pump" from time to time. But it has to refill the well AFTER it primes the pump....something we have NEVER DONE. The well is running dry.
...so glad you're reading Nyquist, BD. Despite the Jeremiah-ish gloom, he's not a nutter at all --he's actually a talented historian, with a specialty in a sort of layman's-language psychological analysis of foreign policy.
This current crisis is being advertised as a so-called "market failure" (listen for the term, it's appearing like the first drops of rain on a windshield). It's everything but. The heart of the disaster is the government's removal of apparent risk, or should that be the apparent removal of real risk, in the Fannie & Freddie tranches. That's what underwrote the fantastic levels of leverage, levels which which crashed when for some reason the "government bubble" busted.
IOW, if that's a "market failure" then what's NOT a market failure?
Buddy, thanks again for the Nyquist link. I don't find him Jeremiah-ish at all. Lots of common sense and, knee deep in reality would be more like it. He is writing in a time where common sense is unfortunately not so common.