The Wisdom of Government Intervention

How many people do you know who want to become wealthy?   Everyone I know, but I’m talking about the ones who want to become wealthy and actually toil everyday toward that goal.   We’ve all seen these people, a little bit out in left field obsessed with some little idea, passionate to bring their ware to all the masses.   Normally they’re out of touch with popular culture wearing out of style clothes uncharacteristically ignorant which Hollywood stars are redoing their stints in rehab.

These characters seem willing to tack right into the wind of conventional wisdom and believe they will succeed by the force of their own personality, regardless their detractors.   They fail over and over, but undeterred the most willing persevere.   Their perseverance in the face of failure educates them and endows them with wisdom.   That wisdom, imparted by a free-market rejecting their earliest offerings, is used to adjust their products, their services, and their marketing strategies.

Some come from wealthy backgrounds and possess advanced degrees from Ivy League schools and some didn’t graduate from high school.   Some are brilliant with high IQ’s and some quite pedestrian.   What these people share is a can-do self-reliant spirit encouraged and grounded to an American culture which promises success available without prejudice and without preference to a privileged class.   What they reject is the assertion that success can only come by the lucky alignment of fate, random, unpredictable, and separate from one’s own efforts.

It is a belief system that shuns government intervention and it contrasts sharply the philosophies held by most in public service.   It is an ideology wedded to the proposal that All Men are Created Equal

It is the sort of thinking which celebrates independent initiative and creative idea disconnected from the traditional and specific rules that suggest working outside of the box cannot bring triumph.   It is completely counter to the bureaucratic mindset which believes the free-market is inherently unfair and it is the job of those in public service to level the playing field.   Unfortunately, a level playing field is not measured by equality in opportunity, it is measured by equality in outcome.

Graduating from our institutions of higher learning our average public servants are great with charts and statistics and anticipated causes and effects, however, they are rarely right.   And when they are wrong they get promoted.   Their rewards are not bestowed by market demands the lowly businessman must subdue himself, bureaucrats are rewarded by promoting and protecting bureaucracy.

When the independent businessman provides what is not desired, he quickly adjusts not to provide such, and searches for that which is demanded.
 
When government’s role is to maintain an environment where any can succeed, and success is awarded through that hard earned wisdom gained through repeated failure, society is supplied with the wares and services it has asked for.   When government ventures to manufacture arbitrary outcomes and treat society as an adolescent body unable make its own decisions we are all indentured to outcomes which forgo that body of wisdom earned by the real world producers answering the people’s demands.

When bureaucrats decide how we ought to escape an economic disaster of their own creation, we add a trillion dollars of new debt for which our children and grand-children will be responsible and we trade wisdom from hardly fought battles gained in the free-market for theory expounded from a classroom.

The United States people have just guaranteed a one trillion dollar promissory note making our total debt almost twelve trillion dollars.   I hope the theorists get it right this time.

No successful businessman looking out for his own best interests would ever be confronted with such a mess, but an unscrupulous one using someone else’s money just might.  

 

Copyright 2008 Jim Pontillo

17 thoughts on “The Wisdom of Government Intervention

  1. There’s a distinct sense here of a giant elephant in the room…the global collapse of deregulated financial markets and the discrediting of the ‘free market experiment’ perhaps? But no problem for you Jim, just keep reading your text books, capitalism’s so simple isn’t it?

  2. Yes, Matt, it is. Jim just didn’t explain how your comment ties in because it should be inherently obvious.

    The “global collapse” is happening because of failed corporate policies. As a result, it should be allowed to fail. Nothing quite like utter failure to discourage similar future actions. Having the government prop up those who made poor decisions will only propogate damaging business practices.

  3. Let’s deconstruct your argument!

    1. According to you, “Hollywood” means godless liberal communists who literally worship the government [http://www.formykountry.com/?p=35]. Hollywood is also “subversive and dangerous” and exists only for communist, leftist propaganda [http://www.formykountry.com/?p=26]. Of course, by inventing a version of Hollywood like this, you get to say that only god-fearing conservatives are hard workers, because after all, “they’re out of touch with popular culture wearing out of style clothes uncharacteristically ignorant which Hollywood stars are redoing their stints in rehab.” Nevermind that many conservatives uh watch movies and TV and wear clothes newer than 1999. Or that they read tabloids and watch FOX news! Anna Nicole Smith and Paris Hilton coverage aren’t pop culture, I guess!

    2. Apparently, perseverance alone is enough or someone to succeed. You outright deny the reality that opportunity and, yes, luck play a major role in whether one achieves success or not in the free market. If you miss your window of opportunity to launch your new product, guess what? The market for that product has moved on. You also ignore that failure in the market is not the only way to gain wisdom; if the only way to learn was from trial and error, then there would be a lot fewer wealthy people in the world.

    3. I thought colleges were COMMUNIST INDOCTRINATION CAMPS!!!!! How can they be breeding the next generation of capitalist success stories?

    4. You falsely claim that government intervention is incompatible with individuals pursuing their ideas and labours to the fullest extent. The WWII War effort demonstrated beyond a shadow of a doubt that the government can be a powerful mover in the economy. I do not know why anyone would need another example.

  4. 5. You just invented a “traditional rule that thinking outside the box cannot triumph”. Since when has innovation been looked down upon? The spirit of 19th and 20th century western culture was that progress, advancements, and innovations are the driving forces of civilization.

    6. You assume that there is equality of opportunity if there is no bureaucracy. As we learned a few columns back, banks and financial houses refused to engage in business with minorities, they redlined entire neighbourhoods with large minority or poor populations, regardless of credit ratings or reliability. That sort of pre-emptive discrimination defies the maxim “All Men are Created Equal” and would not have been eliminated without… government intervention!

    7. You turn around from saying that college education is productive, to saying that actually, it is useless in real life! Evidently, you were always an anti-intellectual and view college education as an obstacle to be overcome by those who wish to succeed. But beyond that, your anti-intellectualism obviously blinds you to the fact that predicted causes and effects, and statistics, and demographic studies, are very accurate and very useful! It is a science for a reason. So, in your ignorance, you dismiss education as useless and “rarely right” when it is in fact the opposite.

    8. You claim that wisdom and theory are incompatible, when the opposite is true.

    9. If your theory that trial and error makes the market wiser is true, then this financial crisis would not have happened in the first place. Investors and entrepreneurs should have learned from earlier market bubbles, like the Dot-com boom, or the Roaring Twenties. They should have learned by now that what goes up must come down.

  5. You mythologize hard work and perseverance as the most important elements of success, dismissing other important, if not vital factors, such as opportunity or social standing. A bum with a revolutionary idea is not going to be able to pitch a new motor design to GM, for example, not unless he has connections. Yet you claim that this market is apparently entirely fair and offers equal opportunity to all entrepreneurs and workers, despite the very real fact of demographic-based discrimination.

    You tie this “cult of labour” mythology into the general free market mythology, by saying that only hard work and perseverance and trial and error can give one wisdom and help one succeed. Of course, the current financial meltdown shows how wrong this statement is, given that it is one in a long line of financial failures, market crashes, and poor business decisions.

    You dismiss education as not simply useless in achieving success, but a handicap in attaining wisdom. Your anti-intellectual ideology states that theory, statistics, and education are almost always wrong, despite the plain fact that they are generally useful. You also contradict your own mythology regarding the function of the free market; apparently, trial and error in the marketplace of ideas does not result in wisdom, and the entire enterprise of education is useless!

  6. Conclusion time

    What you’ve achieved here is to make a false and self-contradicting mythology of education. You define “righteousness” in opposition to your constructed myths about “liberal indoctrination/education,” “liberal Hollywood elitists,” and “liberals who hate innovation”. You define righteousness as Conservatism in opposition to enemies you have invented yourself.

    Not only that, but you claim that they are mutually exclusive, despite the obvious crossover between conservatives and patrons of pop culture; between conservatives and educated successes; between liberals and success in the free market [Steve Jobs for one]; between wisdom and education; between government and market success; between theory and practice.

    You are dividing them based entirely on partisanship: anything you see as “liberal” is defined as bad and is rejected, despite its obvious use by liberals and conservatives and marxists and libertarians and so on and so on.

    Now, I know you’re not stupid. You’re simply an anti-intellectual, an extreme partisan, and either very ignorant or very dishonest.

  7. Adam,
    You do realise that had all these banks and financial institutions been allowed to fail then the entire global financial system would have imploded spectacularly and we’d be back to the 1930s again, right? You have no answers to the problems of the world, you just seem to think that, so long as we leave everything to run its course and don’t ‘interfere’ then everything will be fine. Well here’s a wakeup call – EVERYTHING ISN’T FINE. Banks around the world are on the verge of collapse, unemployment is on the rise and you sit there and say “the market will sort it out”. Are we simply meant to be spectators sitting on the sidelines as our economic system falls apart around us?

  8. The market created this mess – Clinton’s pressure on the banks was not to make stupid business decisions, but to offer loans to creditable minorities and poor people. The banks did not have to buy crap mortgages from uncreditable people, there are plenty of creditable poorer people and minorities who would like to own a house. They might have even been able to, if this real estate boom hadn’t put it beyond their reach.

  9. To pre-empt a dick response:

    The boom was caused by speculators, whose speculating ways were made possible by DEREGULATION and weakening of tax laws.

  10. Yeah,

    And the speculators were a bunch of poor people who had no business buying houses they couldn’t afford!

  11. Crumb,

    You speak for many of us. Keep up the unrelenting attack. Good job!

    Considering how many people put such unmitigated faith in the free market, I’d be willing to wager few have acquainted themselves with the likes of Smith, Ricardo, or their champion Friedman. Of course, that’s for effete academics.

    This is what happens when the masses worship at the alter of the market.

  12. Kira:

    If you have ever set eyes on Home and Garden television, you will know that there is a cottage industry of TV shows about flipping houses, because flipping houses was so incredibly popular for almost ten years, reaching a fever pitch in recent years. Here is a brief and handy list of some from around the world.
    http://en.wikipedia.org/wiki/Category:Home_renovation_television_series

    If poor people were speculating on houses, they would not have the resources to renovate a house and efectively gamble on whether they’d make their money back. Flipping a house is a very upper-middle class activity, since they have the disposable income for large investments.

  13. Be fair, there’s no reason for most people to pay attention to the ups and downs of the real estate industry. It’s not an issue for most people unless it melts down like this.

  14. I wish I had more time to read each and every one of these comments, but I think I’m getting the gist here. On one hand we should let the market alone and I do believe that if the government wouldn’t have messed with the whole mortgage industry in the first place, we wouldn’t be where we are. The problem is with the emerging philosophy that we have made it OK to get by on credit and live above our means, as if it is a “right”. When was that ever smart? The fact is simple. You get what you work for and believe me there have been all sorts of strides for ANYONE to be able to better themselves! I work with high school seniors who apply for colleges, and I must tell you – if anyone thinks that minorities don’t have advantages you are dead wrong. There is ample scholarship and grant money out there for just about any minority if you want it. And to top it off the GPA and standardized test score requirements are lowered to help more qualify. This has been going on for many years now, and quite frankly, I don’t understand the continued cry for more allocations to “even the score”. These home loans were just out of control and while I want to see everyone be able to get a home, I don’t see why they had to be homes that couldn’t be paid for. Obviously people were told they could qualify for a much higher mortgage and instead of using common sense and practical budgeting, they fell for it. What ever happened to “buyer beware”? When someone signs the paper to borrow money, they are the ones responsible for paying it back. Gee, what a concept!…..

  15. Just chiming in here….

    Statistics are just a point of view. Not fact. Facts are based on actual VOTES. We will see on Nov.4th. What you believe you see in statistical points spreads are what you make of them it all depends on which channel you watch and which team your are rooting for, and which newspaper you are reading.

    Even the most educated man can be charged with having done something stupid.

    I love this quote by Thomas Jefferson…

    ‘A little revolution now and then is a good thing.’

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