We are living in historic times.  In the past months we have been witness to the largest government takeover of private industry ever seen.  AIG, Citibank, GM, and Chrysler have all been taken over by our government.  To get a glimpse of what this will mean to our citizenry, we need look no further than Fannie Mae and Freddie Mac.

            Fannie Mae and Freddie Mac created the housing bubble that has led to one of the greatest losses of global wealth in history.  Rather than using standard risk management models to determine eligibility of a loan or assessing the ability of the potential borrower to pay back the loan, Fannie Mae and Freddie Mac were politicized and used to promote a social agenda whereby loans were given based upon minority status.  When the individual could not put any money down on the property, zero down loans were created.  If the payments were too high, short term adjustable rate mortgages and interest only loans were created.  In order to compete, other banks were encouraged and in some cases forced to offer similarly risky loans.  All of this easy credit led to excessive inflation in home values.  What we see now is that many of the people that were supposed to have been helped through the social agenda based loan policies are now the ones that have lost their homes, declared bankruptcy, and in many cases lost their jobs through the economic collapse caused by the housing bubble burst.

            To apply these same political processes to our financial, insurance, and manufacturing industries will be devastating to our nation, our freedoms, and our very way of life.  Even those companies that have been fiscally responsible will be affected.  As GM and Chrysler move forward, they will be forced by the government to produce alternative energy and sub-compact vehicles, vehicles that the majority of Americans have rejected through free choice.  Earning a profit will no longer be a prime motive for determining what vehicles are produced since the government now owns a majority stake in these companies.  Without a profit motive, these companies have no reason to improve services or seek innovation to produce better vehicles.  As the companies lose billions of dollars annually, the federal government will subsidize them in the same way is has subsidized Amtrak for the past 37 years.  Other auto manufactures will be unable to compete simply because they are not receiving government subsidies.  Just as Amtrak has prevented any other passenger rail service companies from being able to compete, GM and Chrysler will eventually spell the demise for automobile manufacturing in the U.S. 

            As I have written before, we can resolve these problems through conservative principles of limited government and the free market system.  I wrote months ago that both GM and Chrysler should have been allowed to enter bankruptcy protection instead of accepting bailout money.  Through the principles of allowing failure and rewarding success, we will reverse the ineptitudes of government that is epitomized by Amtrak, the Postal system, Medicare, Medicaid, Social Security, and the Bureau of Motor Vehicles.  There is nothing that the government does better, more efficiently, or more effectively than the private sector.  As our government continues to nationalize key industries, we lose the competitive drive, rugged Americanism, and entrepreneurship that has made this country the most successful in the world and made her the envy of all others.  Rather than apologize for our success, rather than make our states beholden to the federal government through acceptance of so called stimulus funds, our elected officials need to look toward the conservative values that allowed us to become the world’s greatest nation.

This entry was posted on Sunday, June 7th, 2009 at 6:57 pm and is filed under Ohio's Economy. 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.