Libertarian Ramblings

A bailout would be unethical

Posted by gravisman on September 28, 2008

I’ve already posted on the logic of why a federal bailout of wall street firms is a terrible idea economically. That should seem obvious to anyone. Government management of economic matters only ever does one thing: artificially affects prices. Printing money inflates the system artificially and drives up prices of everything. Using the Fed to set low interest rates artificially drives down the price of money (more precisely, the price of debt). Purchasing insolvent “illiquid” assets drives up the prices on those assets in the sense that it keeps them from falling down to a level where the market would actually be interested in purchasing.

Artificial pressures on prices are unfair and unethical to the players in the economic system. They always result in bad investment, because goods are being traded for something other than a real market value. An accumulation of bad investment always ultimately results in an economic bubble that must burst to correct itself. That is the nature of economic systems – people must pay the price for poor investment.

Just as much as the initial government pressures that influenced and supported poor investment were unfair to the market, so too is the action of propping up that failed system with an artificial bailout. This prevents the market from draining the bubble, as needs to happen, and course-correcting so that prices and investments can return to a sound state.

In addition to all this economic logic, there is one overriding reason why bailing out ailing investment firms with federal money is completely and entirely unethical, and it has nothing to do with whether doing so will fail or succeed. The simple fact is that the mob (some people call it government) has no right to decide that it needs $3000 dollars of my money (probably more than that, but a rough estimate based on the taxes I pay and the budget for the bailout) to help some private companies that have nothing to do with me, and do this without my consent.

If the bailout plan passes congress and I attempt to withhold $3000 of my tax money, men with guns will certainly come for me and throw me in prison. That is insane! Our people must wake up and recognize that there is an ethical element to government and how it spends its money and how it takes money from the people that cannot simply be ignored. Just because we have the infrastructure in place to take money from citizens whenever we want and spend it on whatever we want does not make it right.

Government should be allowed to collect some taxes and spend them on courts, transportation, non-aggressive defense, and other matters of reasonable infrastructure. The mob cannot take my money just because it paternalistically thinks it knows how to spend it to help me better than I can spend it to help myself. That is truly insanity.

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One Response to “A bailout would be unethical”

  1. Brett Wysocki said

    I’m glad no one listens to you…haha…kidding…it really is fairly true…

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