In our march towards European style socialism, it seems that everyone in Washington, Democrat and Republican, believes that the nationalization of the banks is not only inevitable but to many, desirable. Many Americans seem to accept the idea that because of the economic mess in which we find ourselves, it is alright for the government to take actions that are not only contrary to the constitutional republic the founders envisioned but would have been unthinkable not to many years ago.   The problem is as the Obama administration rushes to, as Mr. Emmanuel said, not waste this crisis, few are looking at all the implications of the nationalization of industries, banks in particular.

     The first and most obvious is that fact that the government will have access to all our financial records. Now you may say that they do already and to some degree that is true but currently there are limits. If the government wants your records they need a good reason and to get them it usually involves law enforcement, a judge or the IRS. If the banks are nationalized government employees will have access to our financial records as a matter of course. There are two critical areas of privacy we once took for granted. One was doctor-patient confidentiality and the privacy of our medical records. That is disappearing under provisions found in the stimulus bill. The second is the privacy of our finances. The erosion of that sphere of privacy has been disappearing since the adoption of the income tax. Now any vestiges of our financial privacy will disappear. If our finances and records are under the control of the government, we lose a very important safeguard of our freedom.   The day when our taxes are taken directly from our bank accounts cannot be far away. If we criticize the government, could we find our accounts frozen or subject to convenient bureaucratic error? The IRS has already been used thus, will the banks be next? Finally, think of this. For seventy years we have dutifully sent in payments to the government for our retirement, known as Social Security. Where is all that money? It is gone. If the government is in charge of our bank accounts, money markets and even investment accounts, do you think for a moment that replacing all our real assets with IOUs will not be a real temptation? History does not inspire confidence.

     Now consider the fact that if the government owns the business, in this case the banks, the rules, regulations and policies of the business will no longer consider market forces or reflect common sense but will be driven by ideology. It is the desire to survive and make a profit in the cutthroat world of business competition that makes businesses innovative and efficient. Remove competition and the need for profit and you get...government.   That is why all these bailouts are a horrible idea. They subsidize failure by replacing losses due to poor business practices with taxpayer money.   It removes the incentive for business to make the hard decisions necessary to turn themselves around and become profitable again. It is just like welfare. Give a person enough money to live “comfortably” without working or subsidize destructive behavior and there is no incentive to improve or work.

     If business decisions are made based on ideology as opposed to market forces and profits, the business can engage in practices that would be destructive to a for profit entity. For example, if the government decided that every person should own a car and it controls the banks, it will choose to make loans to people that are high risk in addition to normally qualifying people. What happenes when people who cannot afford a new car get a loan for one and can’t pay? The bank, in this case, the taxpayer, is on the hook for it. Soon there is a glut of late model used cars that have been repossessed but because the government desires people to own cars, they will subsidize the people who have failed to keep up payments or couldn’t really afford them to begin with. Now the taxpayer is not only on the hook for the bad loans but is forced to bail out the delinquent car owners. Hmm, sound familiar? That is how we got into the housing mess and how we are dealing with it.

    Now, besides the policies and rules these government run entities will be guided by, consider how they will be run and by whom. Certainly, those who run the banks will no longer be receiving million dollar bonuses or flying on corporate jets to fancy retreats. Perhaps all banks will have executive pay limited to half a million dollars or less. The thing is this, and this is basic human nature, which socialism of all stripes tries to ignore. People who have talent, people who are innovate and motivated, people who are successful for these reasons and others expect to compensated for their efforts. If you put a ceiling on that success one of two things will happen-they will stop working as hard or they will move to a field where their potential remains unlimited. That means the people running the banks will do so with all the efficiency and innovation of every other government bureaucracy. In the middle and lower levels, the banks will be staffed by employees that belong to a government union which means they will be sympathetic to the progressive politicians to whom they owe their employment. Could that color their handling of accounts, doing favors for politically like minded and connected people and making it hard for people labeled as part of the opposition? Don’t think so? Consider how the IRS handles cases like the current treasury secretary, Charlie Rangel and Tom Daschle and how they would handle your “mistake”. Now put that culture in charge of your bank account, loan approval process or even easy access to your money.

     Finally, consider how well the government accounts for its own money. Enough said. The market works because every business and individual in it needs to deal with the consequences of their actions as it utilizes limited time and resources. Wrong choices lead to loss, good choices and innovation lead to the creation of wealth. If the banks were left on their own, they would find a way to reverse their losses and those that didn’t would go under. At the other end of a difficult transition, the banks that survived would be stronger and better.   Government, because of its size, its ability to coerce consumers to support it, and its ability to create money, can ignore the basic rules of economics longer than an individual or a business.   Longer, but not forever. In this case the old saying is true. The bigger they come, the harder they fall. We have used the power of government to keep large entities from falling, merely delaying the inevitable. If the government continues to gobble up sick entities, it will only lead to a more severe illness and the government is sick enough as it is. We cannot continue to ignore common sense, human nature and basic economic reality and with the speed with which we are running away from all three, a very bad fall is coming more quickly than we realize.

www.patricksamuels.com

      The answer to that question depends on a few things but arguably the most important is your access to information. In order to make intelligent decisions in life, to consider viable options when contemplating a course of action, to evaluate reasonable solutions to a problem, information is crucial. Consider the difference between the majesty of the Roman Empire and the Dark Ages that followed. What was the difference? Access to information. Under the Pax Romana, information and technology traveled over Roman roads. With the fall of the empire people cloistered themselves in manors and small city states and such small entities did not have the resources to utilize Roman technology, they did not communicate readily, and skills and information were lost, awaiting the rise of the Enlightenment, the printing press, and eventually the Pax Britannia.

     The people of the Enlightenment understood that the dissemination of information was not only necessary for progress but a critical component for man’s political freedom.   As products of the Enlightenment, the founders of our nation appreciated this and made sure the free dissemination of information was included in the Constitution. As we have seen, the founders were correct when they believed that even though the Constitution specifically limited the power of the government, if certain things weren’t spelled out (and even when they were), the government would expand its reach and ignore the rights of the governed. The first amendment to the constitution guaranteed the free dissemination of information. It promises freedom of conscience first for without the freedom for innovative thinking, there will be no information to disseminate. It protects freedom of speech and of the press, the two ways of presenting information in the eighteenth century. It insured the freedom of assembly so people could receive the information and process it freely among themselves. Finally, it recognized the right of the people to petition the government for a “redress of grievances” which means the aforementioned rights were specifically concerned with political speech. Just in case the government forgot this, the second amendment was added to guarantee the first.

     Today, our access to information is unprecedented and comes to us in a myriad of ways. The spoken and printed word have been joined by radio, television and the Internet, satellite communication and cell phones. With all these options and the great variety not only of the information itself but commentary on its importance and meaning, we must rely as never before on our wisdom and values to properly evaluate all that bombards us. That is why John Adams stated that our form of government was for a moral and religious people and was inadequate for any other. If we do not have a template by which we evaluate information and commentary, we will not be able to properly utilize or even understand it.

     Those who seek power understand this.   Most obviously, those who seek absolute power seek to control the dissemination of information. They seize the press, restrict speech and free assembly. These are the first signs of a coup. But such an abrupt change is often met with resistance, something progressives and communists understand. If the government can control education in such a way that the populace accepts an aggressive government role, destroy the moral intuition of the people by marginalizing religion, and keep people too busy scraping by through burdensome taxes to pay close attention, that government can set itself up as the primary or sole arbiter of valuable information.   For one hundred years, the United States Government has been implementing just such a plan..

     Until the time of Reagan, the “plan” had been going well. Journalism, and by extension, the news, was controlled primarily by progressives who believed in big government, social welfare and the wisdom of the state, as long as it was controlled by like minded progressives. Then the talk radio format took off followed by the Internet explosion.   The progressive stranglehold on the dissemination of information was broken.   This, of course, was unacceptable because unfiltered information and opposition commentary were not conducive to the expansion of government power. The Republicans, who benefited more from this than the Democrats, had power in either the executive or legislative branch for all but two of the last twenty eight years and were not about to do anything to hinder this development even if it occasionally bit them as well.

    After twenty years of constant abuse over the radio waves, and more recently Fox News and bloggers, the progressives have taken control of the machinery of government once again. They have only been in power for a month and they are already clamoring for a reinstatement of the “fairness doctrine” or some effective substitute. It is not enough that the major newspapers and broadcast networks support them. Like any good dictator, the progressives want to silence opposition. They couch it in the language of fairness, concern for the needs of the “local” audience and the desire for “balance”.   What progressives don’t understand is that media is a market driven phenomenon. People choose what newspapers to read, what newscasts to watch and what to listen to on the radio. Talk radio is successful because people want to listen to it, liberal radio does not have an audience and therefore does not make money. People making choices is not something progressives approve of however, because in their minds they often choose incorrectly, particularly at the ballot box. Only so many votes can be bought through welfare and pork, the rest have to be coerced through the control of information.

     If we let this happen, if we let Nancy Pelosi and President Obama reinstate some form of the fairness doctrine and restrict or silence talk radio and other outlets for the opposition, including the Internet, their power will be secure for the near and distant future. Consider what has happened just over the last month. Several cabinet appointments have been withdrawn because, in plain language, they were crooks, tax cheats. Without the opposition media, there is no doubt in my mind they would have sailed through the confirmation process.    Look at the way the “stimulus bill” was handled. The opposition party was shut out, the bill was crafted behind closed doors and voted on before anyone had read it. If this is the way things are handled in Washington with a loud opposition media, what will they try to put over on us without such scrutiny? Perhaps the fact that we have a tax cheat as Treasury Secretary and they pass bills without concern for the opposition (or common sense) demonstrates that a majority of Americans accept it or don’t care. But shouldn’t we have the option of choosing to care or not?   Without scrutiny, what will they do next? Once the first amendment is legislated away, what about the second? Will we know the many examples of abusing the power of government to intimidate the opposition? Would the death of Randy Weaver’s family or the intimidation of Joe the Plumber by Ohio bureaucrats make the news under the new rules? The power of the media is not just what they print but what they don’t. If they ignore corruption and abuses of power, how can the people become outraged? If all the stories remain local, a national movement to hold the government accountable will be impossible. The ultimate “Check and Balance” in our republic is “We the People” but we are only as effective as the information we have. Whether you agree with the opposition or not, its very existence is crucial in providing us the information necessary to guard our freedom. It would be a sad historical twist to see freedom loving people in America forced to listen to offshore radio broadcasts or risk visiting banned websites to get around the state run media.   We are only as smart as the information we receive and if the fairness doctrine is reinstated, we all may end up Obama sycophants with heart palpitations and tingling sensations at the very mention of his name.

www.patricksamuels.com

Read “Memoirs of a Former American”

 

     This may seem like an odd thing. Amidst all the talk of creating jobs and getting us out of the economic mess we’re in, why wouldn’t the Democrats want us to recover from our economic slump.   First, let’s determine the fact that they don’t, irregardless of their rhetoric. Washington and its spending and regulatory habits are in most ways responsible for this mess.   More of the same is not going to improve things. Spending trillions of dollars, putting us further into debt and temporarily putting a few hundred dollars in out pockets is not the way to recovery. Government taking more money out of the economy now and for the forseeable future is not the way to increase GDP. Demonizing businesspeople, the very ones who are going to create the jobs to get us out of the recession, is counterproductive. Businesses need to be encouraged with tax cuts and incentives, not blamed and regulated further. Common sense says this stimulus bill, the grilling businesspeople are taking on the Hill and the very arrogant attitude the Democrats have taken are the complete opposite of what is needed for recovery.

     But why? Why would the Democrats want the recession to continue? In short, because it sends more power permanently to Washington, to them. Power at the expense of our liberty and freedom. It took me a little while to understand this but the people in Washington, and politicians in general, are all about power, nothing less and nothing more. “Mr. Smith goes to Washington” is a myth. A person who seeks elected office seeks power over other people, it is just a fact. The people who enjoy the exercise of power gravitate to government, it is human nature and has been from the beginning. The founders recognized this fact and wrote the constitution to limit the ambitions of men to lord it over their fellows. That only works, however, when the people in power respect the constitution and the people themselves hold the politicians accountable. Neither is the case today.

     So the Democrats want power. How does keeping us in recession increase their power? Let me give you two important examples. The first is the stock market. It is obvious that the market has not been thrilled with the Obama administration so far which is why the Dow continues to hover around 8000. The market looks to the future and people that know money know that everything the Democrats are doing is bad for the economy, especially in the long run. Keeping the market stagnant, however, is good for Democrat power. Why?   When was the last time you heard anyone mention the privatization of Social Security? People are clamoring for Washington to insure their investments. The FDIC now insures money markets in addition to having raised the limit on other insured deposits. The banks have been effectively nationalized. As President Obama’s chief of staff said, you can’t let a good crisis go to waste.   The crisis on Wall Street has lowered many American’s expectations of a good retirement through their own investments. 401ks and IRAs were all the rage since Reagan, now they look like a fools errand. And to whom will we turn? Washington. Give us more Social Security, insure our retirement investments. By demonizing Wall Street and keeping the market stagnant, the politicians hope to set themselves up as the ones who will take care of our money.

     The second big example is Heath Care. We already know there are some disturbing heath care provisions in the stimulus bill. After all, Tom Daschle recommended that heath care provisions be put into budget bills to speed them along under the radar of the American people.   But why does economic recession help advance the Democrat goal of universal health care? Because most people don’t pay for their own health care, they get it through their employer. The more people who are unemployed, the more people there are without health insurance. So the Democrats have a vested interest in keeping unemployment up. All those unemployed people want health insurance and if the people want it....well we’ll give it to them.   The whole idea here is that the more severe the economic slump, the more Democrats have reason to expand the welfare state, and by extension, their own power. They get to tax and regulate the lives of all those who take government benefits. They also increase their voter base by making more people dependant on their handouts.

      How do they get away with it so easily? Simple, the American people are ignorant of basic economics and the founding principles of this nation. Government schools have taught generations of Americans that government is the answer to all problems, that FDR and Johnson were heroes and Reagan was the devil. Most Americans don’t know the first thing about money management. If they did they wouldn’t have spent more than they earned for all these years and wouldn’t allow Washington to get away with it either. And the title notwithstanding, the Republicans don’t get a pass either. President Bush started this ball rolling and the current crop, for all their bellyaching, aren't doing anything substantial to stop this monstrosity. They know their turn will come in the future and the power they let the Democrats get today will be theirs tomorrow.

     There is only one way to stop it and that is for the American people to stop allowing their votes to be bought with gifts from the treasury. We have to “just say no” to the welfare state. We have to accept responsibility for our own lives and look to ourselves, our families and our local communities for help during tough times. We need to buy our own insurance, we need to invest our own money, we need to create our own jobs and we need to demand Washington get out of the way.   Is it going to happen? Unfortunately, I doubt it. But those who take responsibility for themselves now will weather the catastrophe in the making much better than those who look to Washington and the messiah Obama to meet their every need.

www.patricksamuels.com

 

    Last night President Obama held a press conference to attempt to convince all of us that this stimulus plan was the best thing for the country. Here are a few memorable quotes from that event....

“The Federal Government is the only entity left that has the resources to solve the problem”

     This is just not true. He seems to forget, or refuses to admit, that it was government policy, specifically Barney Frank and his cronies making mortgages available to people that shouldn't have had them and artificially low interest rates offered by the Federal Reserve that caused the bubble in the first place. As much as he wants to think that a hundred Bernie Matoffs, fat cats on corporate jets and retreats to posh hotels caused this problem, he is wrong. Government caused it because lawmakers are, for the most part, ignorant of business and capitalism. The “entity” that will get us out of this is the American people. If the government would stop confiscating our resources and regulating what we do with them, we would be out of this slump rather quickly. It happened in 1920 and 1987, it would happen today. Finally, I would remind President Obama that the federal Government doesn’t have resources, it’s broke and only by bankrupting the next generation or two is he coming up with these “resources”.

“No pork, No earmarks”

     That is all this bill is. It is a Democrat wish list of pork. He can call is anything he wants but the American people aren’t that stupid, they know pork when they see it.

“We inherited a trillion dollar deficit”

     I’m never sure where he’s going with this. I think he’s saying its a bad thing but yet he wants to quadruple it. “They spent too much so I’m going to spend more.” Does this make any sense? Doesn’t he see the burden this puts on all of us and our children? It is worth it to put the next two or three generations in bondage to correct a temporary downturn in the business cycle aggravated by Washington policy? This spending cannot go on indefinitely. We may think we are indestructible but what happened to Japan, Argentina and Zimbabwe will surely happen to us. When our credit score drops and we’ve printed way too much money, everything will come crashing down in poverty and hyperinflation.

“The winter of our hardship”

     Only a coddled American could look at our situation today and say this about it. No one born after the Great Depression has any inkling what hardship is in this country. The “poor” here, with their homes, cars, televisions and mobile phones, live better than a lot of the middle class in Europe. Yes, people have lost jobs and some have lost their homes but even if the Wall Street exec ends up moving from his mcmansion to public housing and lives on food stamps, it hardly qualifies as “the winter of our hardship”.   Hardship once meant the sacrifices people made to come to this country. The Pilgrims, half of whom died the first winter. Immigrants who arrived with nothing and worked in sweatshops for a pittance for years to save enough to have a chance at the American dream. Men who suffered and died on the beaches of Normandy or Iwo Jima, that’s hardship. What is hardship today? Not having cell service, not having a digital conversion box for TV, having to move from a 5000 sq. ft. house to a 2000 sq. ft. house. Most Americans have no idea what real hardship is and that is a testament to our system. However, if we continue down this path, we may very well find out soon enough.

“I inherited the deficit and this economic situation”

     What a whiner! Apparently the culture of victimhood in America has now reached the highest office in the land. If this bill passes and a year from now things are worse, what is he going to say? “George Bush screwed this up worse than I thought.”? Presidents are not elected to play the blame game, they are elected to lead.

“Philosophically, some people don’t think the government should be involved in the marketplace”

     I would like to remind President Obama that he lives in the United States of America and this country was founded by men who believed “philosophically”, and practically, that the government should not be involved in the marketplace. It was the meddling of the British government, through taxes and regulation, that caused their rebellion in the first place. The Constitution was adopted for the express purpose of keeping the government out of our economic affairs. The market, as defined by the individual choices of millions of Americans, works. It is self sustaining and self correcting and should be left alone. 

“Government doing nothing is not an option from my perspective”

     This dovetails with his statement the previous day that if the stimulus package didn’t pass that the effects on the economy would be “irreversible”. Fearmongering aside, his idea that the government has to do something all the time is also contrary to our founding principles. He made this statement after saying that is was right for government to be involved in Energy, Health Care and Education.   Hmmmm....let’s see. Government regulations keep us from using our own energy resources and gave us $4 gasoline last year. Government regulations and insurance have crippled the health care industry and government schools are a dismal failure. Sounds like it would be better if the government did nothing because their something is usually a disaster.

“There is no such thing as a free lunch”

     Ah, truer words have never been spoken. Unfortunately, when it comes to government spending, Washington seems to forget this. They think they can put off the day of reckoning forever, or at least until they’re dead (I was going to say out of office but it would seem most of them want to stay there until they die).   Just like the housing bubble and the stock market bubble, the bubble of deficit spending cannot last forever and it will fall with a crash larger than any we’ve ever seen. If Washington falls, there is no “entity left that has the resources to solve the problem.”

“The Federal Government doesn’t have complete control over that”

    Yet. This statement was made regarding housing. I ask you, what control should government have over housing? I don’t think it should have any. Housing prices should be set by the market and individuals should enter into private contracts for the sale or rental of such property. Where in that formula does the Federal Government belong? Of course, that goes for most economic and social issues in our country.

“The national government is detached from what is going on in the surrounding community”

     President Obama said this about Afganistan. Perhaps he should look at his own house before he throws stones at theirs.

“Not everything we do is going to work out as we want it to”

    No, really? This boondoggle put together by short sighted politicians who have no concept of economics in an attempt to further their own power and ensure a dependent and hopefully grateful electorate couldn’t possibly have unforeseen negative consequences, could it? Perhaps a reminder that the Great Society destroyed the black family and gave us a permanent underclass might make the point. That Social Security is going to bankrupt the country if all this stimulus doesn’t do it first.   That Ted Kennedy’s HMO’s created a whole new set of problems in the heath care industry. Just a few reminders of how brilliant Washington solutions to whatever ails us usually turn out.

“Nobody is above the law”

     Except your treasury secretary, the previous nominee for Heath and Human Services and a few others in your cabinet. We are very close to becoming a “banana republic” where the powerful do as they please and give favors to their supporters, print money like toilet paper and expect the support of an adoring populace.

Now, a note from the peanut gallery..

“The so called terrorists”

    This was in Helen Thomas’ question about the “real” terrorist hiding in Pakistan. I can only credit President Obama for calling them what they are, terrorists, and not following her lead. What she would like to call them, I don’t know. Freedom fighters? Boy Scouts? They kill innocent men, women and children Helen! They are bad people and there is never an excuse for such actions!

     In conclusion, this massive government intervention is very bad for the country. If it, and the ones that will follow don’t break the bank, they will hasten the day when it will break. The founders had it right. If government just gets out of the way, the capitalist system will work and work well. There will be ups and downs but the wisdom of the people and our ability to learn from our mistakes will keep the system running. All this bill will do is trip us up. If we allow it to go through, if we really buy into Newsweek's contention that we are all socialists now, then our fall will be permanent and the government will keep the market down just like it does in France and other European socialist countries. We will no longer be the “Land of Opportunity” because all the opportunities will be managed by government bureaucrats. I don’t want to go there, do you?

Patrick Samuels

Author of “Memoirs of a Former American”

www.patricksamuels.com