This morning I discovered something called the "Drew Carey Project" and heard he'd had put some videos on the web talking about the positive effects of immigration. It turns out that he has a whole series of short documentaries he produces and hosts on a wide range of topics. I've spent the last two hours absolutely absorbed in these things.
If I've ever had any wavering doubts about my libertarianism, they've been completely blown away by the video on bacon dogs. Drew tells a story of a street vendor in LA who was actually JAILED FOR 45 DAYS for the unthinkable crime of selling hotdogs wrapped in bacon. I'm not sure how to link to any individual video, but you can find a complete list here. Scroll down to the video labled "food fight."
On the surface, this was a bad week to be a free-market libertarian. When the stock market tanked early in the week, the blame fell on unfettered free markets and a lack of regulation. When they rose at the end of the week, it was because the government rode in on a white horse and rescued Wall Street and promised regulation to make certain this would never happen again.
In reality, the government's fingers are deeply dug into the current market woes, and the proposed action to save the markets are only going to lead to further woes. First, where is the government going to get a trillion dollars to buy all these insolvent loans? They'll either borrow it, tax it, or create it by printing more (not that I think any actual printing is involved). If they borrow it, it's just another shackle we're locking onto the legs of our children and grandchildren. Our debt is already pushing 10 trillion dollars. If they actually raise taxes to cover this, it's safe to say that will depress the economy enough to drag the stock market down as much as it was going to fall anyway. And, if we print the money, we'll add to inflation.
By intervening in the market this week, government has again rode to the rescue of people who made irresponsible choices. Borrowers shouldn't have been lending money to people with horrible credit scores and no verifiable income. And people with horrible credit scores and shaky income shouldn't have been buying properties they couldn't afford. Investors around the world shouldn't have been investing in portfolios they didn't understand.
Lending money to people with bad credit isn't risk free, or at least, it hasn't been. Now, as I understand the proposed bail out, the government is going to be buying the bad mortgages from banks so that they will no longer bear the risk, allowing their stocks to rise once again. Wall Street has learned a lesson, of course--not the right lesson, which is that they should be careful with the money they invest, but instead the perverse lesson that the government will bail them out if they make risky investments and those investments explode badly enough to cause the stock market to plunge.
If you do check out the Drew Carey Project videos, another eye-opening video is called "Living Large." The point of the video is that the middle class is more affluent today than at anytime in history. But, I think there's a point Carey missed: I'm willing to bet that all the middle-class boat owners he talks to in the video are in hock up to their eyeballs. My biggest worry about America's seeming affluence is that it's borrowed affluence. The government borrows money to keep our taxes low and our social benefits high and to fund foreign adventures and bank bailouts. But the American consumer is no more responsible with their own money--they finance furniture, televisions, boats, tanks of gas, lunches, etc. The concept of saving money to make major purchases is something that seems to have faded from American culture in the span of my lifetime. I remember going with my mother to the layaway department at Sears to make payments on appliances we were buying. The idea behind layaway was that you would go each week or month and pay a little on something you wanted to buy, and when you'd finally paid enough to buy it, you took it home. It requires patience and discipline to purchase stuff this way. Now, it's all been flipped; you buy first, then pay. Layaway departments no longer exist.
We've become a country where responsible choices are increasingly punished. If you choose to live within your means you will have a smaller house compared to your free-spending neighbor who buys a house he can't afford using a subprime mortgage. And, next year when he defaults--no big deal. The government will have backed his mortgage and will take it over, offering some sweetheart plan to prevent foreclosure.
The free market can only encourage responsible behavior if prudent behavior is rewarded in risky behavior is allowed to fail or succeed on its own right. Sometimes, when you go into a casino and put in a silver dollar and pull the handle, the slot machine gives you a million dollars back. Imagine how many more gamblers we'd have in this world if, everytime you put in a dollar you lost it, there was a congressman behind you telling you that it wasn't your fault, that it was the fault of the wicked old slot machine manufacturers, and here's a tax dollar to replace the one you just lost? Because if that's not what's happening on the large scale, I need someone a lot smarter than me to explain how all this makes sense.
In the meantime, I think I'm going to console myself by going to the grocery store and buying some hotdogs and bacon... don't tell the cops.