Ron Morley's Freedom Blog

This is the place where I do my little bit to explain the evils of the State.

War crimes and economic policies

The following is essentially the text of an email that I recently sent to a friend who'd asked me if I thought that senior members of the former Bush regime should be prosecuted for war crimes because of the use of torture as an instrument of national policy. He also asked what I thought about the economic policies of the Bush regime and its expansion of the power of the Federal government. I've edited the original email slightly to make it suitable for publication here, but the changes have been minimal.

Yes, I do think that former President G.W. Bush, Vice-President Cheney, Attorneys General Alberto Gonzales, John Ashcroft, and Michael Mukasey should be tried before the International Criminal Court in the Hague for war crimes and other crimes against humanity. Only this will serve as a warning to those who occupy those positions in the future that the leaders of the United States, no matter the circumstances, are not laws unto themselves, but must be held accountable for their actions. As for the Bush regime's management of the economy, I would think that a reasonable case could be made for malfeasance in office, though I'm not sure it would extend to criminal prosecution. After all, it could be argued that these things fall under the heading of making general policy and that a chilling effect would occur if government employees were made to feel that their actions could be second guessed years down the road and then be prosecuted because of it. On second thought, that might not be all bad. Seriously, though, everything that you mention [the auto company bailout, the Wall Street bailouts, using Federal Reserve policy to encourage the growth of the speculative housing bubble, etc.] is, to my mind, unconstitutional to start with as there is nothing in Article I, Section 8 that gives the Federal government the power to muck about in the market place except to regulate commerce, which, if you look in your dictionary, is defined as the buying and selling of things and the Founders intended regulation to be used in the sense of "to make regular" as is pointed out by both Madison and Hamilton in The Federalist Papers.

The main problem we have at the moment is that the supposed solutions to our economic problems are not only antithetical to our way of life, but they are nonsensical from an economic standpoint. What got us into this trouble in the first place was the over-extension (some of it State-mandated) of credit to those who could not afford to pay down the debt they were taking on. Leaving aside discussion as to "whose fault" that is as irrelevant, the Fed's policy of attempting to "unfreeze the credit markets" is simply trying to continue the policy that got us here. It is the economic equivalent of pouring gasoline on a house fire in an attempt to put it out. How does this make sense? One of the biggest lies that's being told by virtually every so-called economic guru that is given air time on the news these days is the idea that people should not be trying to save any money, but should, instead, continue their practice of spending every cent that comes their way. The only way that a society generates wealth in the long term is to have capital available to invest in new factors of production, whether those be new employees, machine tools, physical plant, or research and development doesn't really matter. The only way that capital is generated is when people do not spend every dollar they have, but, instead, put some aside in savings accounts, CDs, and so on. Those deposits then allow banks to lend that money to those who wish to borrow it to purchase new factors of production, which leads to more production of physical goods, which increases the overall wealth of the society in question. Leaving aside the issue of whether or not fractional reserve banking is a good idea (I don't think it is as banks which are allowed to practice it are inherently bankrupt and are only playing the odds that the majority of their depositors will not want to withdraw their money at the same time) an economic downturn is exactly the time when people should be encouraged to save as that's the way out of the downturn.

However, John Maynard Keynes convinced the politicians of the world that his "cure" of lots of government spending to "prime the economic pump" was the way out of the economic troubles of the 1930s. Of course, this appealed to the politicians because it allowed them to be seen to be "doing something" to "help" the people, while simultaneously increasing their power over the economy: they couldn't make all that new money available without putting some rules in place about how it could be used, now could they? To top it off, deficit spending is wonderful for politicians as future generations get stuck with the bills and future politicians get stuck with making the unpopular choices that should have been made in order to avoid the deficits in the first place. Is there any reason to wonder why America's first Fascist Dictator Franklin Delano Roosevelt loved these economic ideas? Combine the Keynesian economics with the Progressives' ideas of allowing Congress to delegate its legislative authority to "expert decision makers" in numerous Federal regulatory agencies (another unconstitutional idea that was only allowed to really take off after the Supreme Court rolled over for Roosevelt following his attempted court-packing scheme) and you have the basis for the behemoth Federal government that is the bane of freedom which we now live with.

We are but witnessing the logical end of the path which we began to tread in the early 1900s when Theodore Roosevelt began his campaign against the so-called "malefactors of great wealth" and used that as an excuse to put in place the first pieces of a strong regulatory apparatus, which his cousin, Franklin, then expanded enormously in the 1930s. Once the nose of the camel of unconstitutional Federal regulation was allowed into the tent of the free market the march to eventual nationalization of the economy and totalitarian rule was under way. I highly recommend that you read Frederick Hayek's The Road to Serfdom for a more formalized and academic treatment of the reasons that we have reached the current state of affairs. As it is, the Federal government has now effectively nationalized large portions of the financial markets by taking equity positions in large banks as part of the Paulson "bailout program". That process is being extended to the automotive industry via the so-called "bridge loans" being made to GM and Chrysler. Those companies will be unable to demonstrate "financial viability" any time in the near future and the previous loans will be used to justify making more under the guise of "protecting the taxpayer from further losses", instead of allowing the bankruptcy process to take its course so that other companies, which could more efficiently make use of the assets GM and Chrysler now own, are allowed to purchase them. Rather, the majority of Americans are being required to subsidize the life-styles of UAW workers who played a major role in the destruction of the companies they work for by effectively looting them for their own benefit. It's ironic that the socialist who now sits in the Oval Office is going to preside over a situation in which waitresses who work for minimum wage will be taxed so that the money can be given to UAW workers so the union workers don't experience any "economic turmoil" of their own.

And speaking of the minimum wage, one must ask if it makes any sense in a declining economy to require potential employers to continue to have to pay minimum wages to employees who are economically marginal? If job creation is the goal towards which all of the Federal spending and bailout programs are aimed why are private employers not given the freedom to set wages according to the demands of the marketplace? There are a lot of people who would work for $5/hr. right now, and likely a number of jobs that could be economically viable if private enterprise were allowed to follow the laws of economics rather than the dictates of politicians in Washington who have never run a business and whose only goal is to continue themselves in power no matter the cost to society at large. All minimum wage laws have done is to ensure that the economically marginal are unable to find gainful employment, which is why the rate of unemployment among black and Hispanic youth goes up every time the minimum wage is raised (it lags by some time but the correlation is there). Thus, we have the absurd situation, so common with programs foisted upon us by so-called "liberals" (who, in case you haven't noticed, are not liberal with anything except the expansion of the power of the State to interfere with your life, but I digress), in which programs designed to help an economically troubled group simply makes the situation worse for those supposedly being helped. I highly recommend Thomas Sowell's Basic Economics and Economic Facts and Fallacies for further reading in this area.

So, to get back to your original question about whether or not those who profited from the collapse of the housing bubble after putting in place Federal government policies that led to the trouble, I doubt that one could prove a direct link between action and profit. However, I would be in favor of establishing an economic "Truth and Reconciliation Commission" that would be required to investigate and publicize the actions of those responsible in both the government and private sectors, along with undertaking the education of the American people about economic principles that our State-controlled "education system" fails so signally to do. However, there is no chance that such a thing will be done. Instead, the American people will continue to be told that the current economic mess is entirely the result of a “failure of the free market”, while ignoring the major role that the Federal government played in the fiasco that became the housing bubble. Those in power have no interest in the public learning the truth behind the current economic problems and every reason to continue to lie to and mislead the public regarding those issues. The only hope we really have of getting the truth out is via the Internet and the libertarian blogs that thinking people continue to read and discuss.