When Arnold Kling Gets Angry
Well I don’t know if he is angry, but he sure does stick it to those who argue in favor of greater government control. I’m going to post his entire post here since I figure many will be too lazy to click through.
In financial markets, asset bubbles cause real trouble when investors can borrow freely to expand their holdings. To prevent such bubbles, we must limit the amounts that people can invest with borrowed money.
I want to extend the point to cover government, where the chief characteristic is playing with other people’s money. Big Finance and Big Government have much in common. Both are coveted by Harvard graduates. Both are characterized by an arrogant sense of entitlement and importance.
Instead of thinking of the pending bailouts and financial regulation as a new era of government supervisions of markets, think of it as preserving the system in which a Harvard elite controls other people’s money. In fact, very little is likely to change. Reading the news stories about how Secretary Paulson plans to implement the bailout, it seems as though the same people will be in charge of the money. Print some new business cards, change the logo on the front from “Goldman Sachs” to “U.S. Treasury,” and everything else continues as it was. It’s just that it becomes a lot more difficult for ordinary people to opt out of using the elite’s money management services.
That is exactly right. If anyone objects to the notion of leverage as “playing with other people’s money”, then by the same logic they have to object to government…virtually all of it since the entire budget and every penny the government spends is other people’s money. If playing with other people’s money makes one irresponsible then the most irresponsible people in this country are the President, every Senator, every Representative, every state and elected official and every single bureuacrat. They are playing with other people’s money and based on the current financial crisis and the state of the economy they are doing a pretty crappy job of being responsible. American politicians, and politicians in general, are not wise, courageous leaders who make tough choices during crises. They are the exact opposite, they are foolish, and cowards who take the easy road during a crisis lest they lose the one thing they crave the most, the power they have aquired. I find them all to be loathesome.