There continues to be considerable debate about exactly what role the federal government should play with respect to the current economic crisis. The details of all that is going on is frankly far outside my area of expertise, but I thought I would mention one historical point that may provide some context for at least one part of the discussion, relating to the government rescue of faltering companies in the form of bailout funds. Way back in the earliest days of the Republic, shortly after the Revolutionary War and even more shortly after the ratification of the Constitution, the first Secretary of the Treasury was a guy named Alexander Hamilton (who you may recognize as the face on the ten dollar bill). Hamilton was convinced that the viability of the new nation hinged on establishing a stable economic base, and proposed a number of policies to bring that about. One of the most controversial, but ultimately hugely successful, policies was the federal assumption of state debts. Over the course of time from the start of the revolution through the early stages of the Washington administration, individual states had racked up considerable debts to fund the war effort and to establish themselves in independence (at a time when the concept of the "united" states was much more loosely understood). The idea of paying off someone else's debts (which ended up costing about $21 million), didn't sit too well with all members of Congress, but eventually a compromise was reached and Hamilton got his way. By insuring that all those old debts would be honored and paid, Hamilton's plan went a long way towards putting the country onto firm financial footing during a critical period when it's long-term existence remained very much a question.My point is not to suggest that what's happening today in terms of federal policy is justified by what happened 230 years ago-- obviously there are plenty of additional factors to consider and points to be made. However, for anyone to suggest that there is something un-American or socialistic about the steps being taken, is to ignore the fact that the federal government has always played a significant role in shaping the economic circumstances of the nation (for good or ill). Or, to put it another way, government action in the current mess is no more out of line with the actions of the founders than saluting the flag.
2 comments:
John, the federal bailout of private industry is hard to swallow. especially when the CEO's of banks are still in power. There was a book written in the 80's (Ibelieve) called " The Best Way To Rob A Bank Is To Own One" Apparently the heads of the banks read this book. Why has the government not called out for their resignations? Also these "toxic" loans are trying to be resold, this is insane. I believe the bailouts of the banks could've been avoided if the banks would've approached the loan holders and aggressively sought alternative payments, lower monthly payments, lower interest rates, low weekly payments, some sort of creative agreement between the bank and the loan holders. The bank takes a hit the people keep struggling to make payments, more people would have stayed in their businesses or in their homes and everyone would have been working towards the same goal. There would still have been foreclosures, but I believe it would have been a fraction of what it is now and what is to come.
As far as the auto industry , GM has been burning through $1 billion a month for how long now? and now they're struggling to stay afloat. Where was the leadership, the unions and the employees? They should have seen this coming and everyone waited until now to do something. will a bailout only allow other companies to run unchecked? Where does the responsibility lie? With us. Every individual has the responsibility to be involved. Our citizens have become complacent and rely on someone else to solve the problems. Bailouts take away from ingenuity and perseverance. The helping hand is one thing but personal or corporate welfare only enables poor habits.
It would be interesting to know in the past when situations like this existed if bailouts help, or is private ingenuity longer lasting?One way is for everyone to be mandated to 2 years of community service, to develop a sense of ownership or responsibility to their country.
Tom
Tom,
I totally agree with you. My point was not that the bailouts were good, only that they did not represent something new; nor did they represent some kind of socialist takeover of the government, as charged by some extreme right-wingers (Hamilton is a hero to most conservatives). There was a Congressman just today who pulled the old McCarthy routine, claiming to have a list of Socialists in Congress (but of course not sharing any of those names). This kind of rhetoric is destructive, and alienating to the citizens who need to pay attention and make the government accountable, as you say. Too many critics resort to charging the government with asserting too much power, but that isn't the problem; it's that they assert that power in ways that are inefficient, counterproductive, and punishing to the wrong people (the taxpayers).
Dr. John
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