“There is no such thing as a free lunch”; “You can’t get something for nothing”. We have all heard and recited these phrases many times, these words may have never been truer than today. Whether we are talking about individuals, schools, small businesses, or major corporations, whenever the government offers money in the form of welfare, subsidies, or bailouts, there is a price to pay. This price is steep and it is paid by us all. Our social spending, the war on poverty and the New Deal, has cost this nation billions of taxpayer dollars with nothing to show for it. If poverty were simply a situation of having no money, we would have eradicated poverty years ago. Agriculture subsidies come with regulations that restrict what farming practices farmers can use. It limits what they can grow and where they can grow it. Our administrators have lost local control of our schools since accepting increased federal and state funds, exponentially increasing the cost to operate our schools. Individually, when we accept government payments there are also restrictions and expectations placed upon us. State and federally funded universal health care will come with the expectation of modified behaviors; tobacco products, fast food, and foods considered unhealthy will all be heavily taxed, restricted and in some instances even outlawed. Risky behaviors will be restricted and more regulations will be enacted, all for “our own good”. Helmets will be required for motorcycle riders, all passengers in an automobile or bus will be required to use seatbelts, gun ownership and even carrying a pocket knife will be restricted and banned. These advancements in regulation upon the citizenry have already occurred in Great Britain since adopting Universal Health Care.

Our current “economic crisis” is another prime example of paying dearly for a “free lunch” as government tries to inject itself into the free market. Capitalism, lack of regulation, or oversight is not to blame for our current situation. Our current problems started with the New Deal but were greatly exacerbated over ten years ago with the creation of Freddie Mac and Fannie Mae. These are government run agencies that determined success not by merit or real earnings, but by a social agenda for the purpose of giving loans to individuals that could not qualify for traditional loans and were high risk for repayment of those loans. This type of subversion of the free capitalist market skewed the market, artificially elevating home and stock values. Home owners as well as investors saw their portfolios grow seemingly overnight because of this “free lunch”. What we are now facing is nothing more than a necessary correction of these markets. Unfortunately, so many financial institutions, businesses, and individuals are so heavily leveraged that they cannot survive these devaluations and are becoming financially insolvent. As this happens, banks don’t know who next will default on a loan or declare bankruptcy; therefore banks have tightened the flow of money and are limiting loans to other banks, businesses, and individuals. Even responsible businesses and individuals cannot borrow money no matter how good their credit rating is. Now, the same government that thought injecting itself into the banking industry was a good idea wants to apply even greater controls over all aspects of not only the financial industry, but to all businesses and individuals. Instead of having to live through this “bitter pill” for several months, our government wants to extend this misery for several years. The Great Depression was brought about by a very similar type of government intervention and it lingered for ten years because of government interference. Government intrusion will not prevent the correction; in trying to control and soften the blow of the correction, government will simply cause the effects to be felt for a much longer period of time and costing us all even more money in the long run.

In the event of this bailout, there will be no accountability. The market will not be cleansed of those entities that utilized bad business practices; those entities will still exist and will continue to apply the same bad business principles that put them in this very predicament. In my judgment, we need to allow the marketplace to determine the winners and losers; we need to allow the losers to fade into the history books while allowing the winners to grow and newcomers to the market to be allowed to compete. Those businesses that apply sound business practices should be allowed to succeed and not be held down by the losers that are being artificially supported by an intrusive government at the taxpayers’ expense. The apparent economy of the 1990’s may have been a wonderful feast, but as we taxpayers will soon find out, there is no free lunch.

This entry was posted on Saturday, October 4th, 2008 at 1:06 pm and is filed under Ohio's Economy, Taxes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.