U.S. Representative Ron Paul

This week the bailout of the Big Three automakers was under heavy consideration in Congress’s lame duck session.  I have always opposed government bailouts of private organizations.  Back in 1979 Congress had hearings about bailing out Chrysler and I was on record pointing out that these types of policies are foolish and very damaging to the long term economic health of our country.  They still are.

There was also renewed pressure this week to bailout homeowners and send another round of stimulus checks to “Main Street” to balance out all the handouts to big business.  It seems that eventually the entire economy is going to be blanketed over with Federal Reserve notes.  Most in Washington are completely oblivious as to why this model of money creation and spending is so dangerous.

We must remember that governments do not produce anything.  Their only resources come from producers in the economy through such means as inflation and taxation.   The government has an obligation to be good stewards of these resources.  In bailing out failing companies, they are confiscating money from productive members of the economy and giving it to failing ones.  By sustaining companies with obsolete or unsustainable business models, the government prevents their resources from being liquidated and made available to other companies that can put them to better, more productive use.  An essential element of a healthy free market, is that both success and failure must be permitted to happen when they are earned.  But instead with a bailout, the rewards are reversed – the proceeds from successful entities are given to failing ones.  How this is supposed to be good for our economy is beyond me.

With each bailout we hear rhetoric that this is the mother of all bailouts.  This will fix the problem once and for all, and that this is absolutely necessary to avert disaster.  This sense of panic squeezes astonishing amounts of dollars out of reluctant but hopeful legislators, who hate the position they are being put in, but are relieved that it will be the last time.  It is never the last time, and again and again we are faced with the same scenarios and the same fears.  We are already in the bailout business for such a staggering amount that admitting it was wrong in the first place would be too embarrassing.  So the commitment to this course of action is only irrationally escalated, in the hopes that somehow, someway eventually it will work and those in power won’t have to admit they were wrong.

It won’t work.  It can’t work.  We need to cut our losses and get back on course.  There is too much at stake for too many people to continue down this road.  The bailouts thus far to AIG, Bear Stearns, Fannie and Freddie, and TARP funds amount to around $1.5 trillion. Considering our GDP is $14 trillion, and our Federal budget is already $3 trillion, this additional amount will significantly eat into our future lifestyles.  That amounts to an extra $5,000 that every person in the country needs to somehow produce just to keep up.  It is obvious to most Americans that we need to reject corporate cronyism, and allow the natural regulations and incentives of the free market to pick the winners and losers in our economy, not the whims of bureaucrats and politicians.

Posted in Monetary Policy | 77 Comments | Permalink

As the financial sector continues its tailspin despite efforts to bail out Wall Street, among the few gainers in recent stock trading have been those companies looking for a new “shot in the arm” with government funding from the next administration.  

With its strident rhetoric toward reestablishing the so called “pro-choice” agenda, the incoming administration has threatened a whole host of policies that would not only reduce restrictions on abortion, but would actually force people who wish to avoid participating in the procedure to support it.

As a physician who has delivered over 4,000 babies I am very disturbed by the continued efforts of those on the left to establish absolute rights to abortion.  However, even more distressing is the notion that taxpayers should be forced to subsidize life-ending procedures such as abortion and embryonic stem cell research.

In addition to the news that those who will benefit from federally-funded stem cell research have seen an uptick in their financial position as a result of the election, comes news from the United States Conference of Catholic Bishops that many health care facilities under the auspices of the Roman Catholic Church may be shut down as a result of the so-called “Freedom of Choice Act” for refusal to perform abortions.

Not only does this Act seem to have growing support in Congress, the President-elect and his Administration have indicated support for this legislation.  Since many people cast their votes in a way that they believed would help to improve and increase availability of health care, this is an ironic twist.

Of course, the government takeover of health care began a long time ago, but we should be wary of how far that takeover will go if more private providers are forced out of the marketplace.  If enacted, The Freedom of Choice Act and the potential for increased federal funding of embryonic stem cell research will go to show that the incoming Congress and Administration are far more dedicated to a government takeover than they are to affordable and available health care.  Moreover, these approaches show no real concern at all for the free choices of taxpayers and health care providers who wish to be free from giving assistance to immoral activities.

These facts should also serve to remind social conservatives that they are better to leave the legislative remedies for important social issues at the level where they constitutionally belong, namely at the discretion of state and local officials.  The centralization of power that seemed so attractive to many conservatives just a few years ago no longer seems pleasant at all in light of a more liberal-minded majority in both Houses of Congress and the White House.

This should be a good lesson for future conservative majorities, namely that the centralization of power never results in anything more than the most temporary of “gains” for those who are committed to traditional moral principles, and the power one administration consolidates for itself must inevitably be handed over to the next administration, which will use that increased power for its own agenda.

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Posted in Civil Liberties | 106 Comments | Permalink

With the election behind us, our country turns hopeful eyes to the future.  I have a few hopes of my own. 

I congratulate our first African-American president-elect.  Martin Luther King, Jr. certainly would be proud to see this day.  We are stronger for embracing diversity, and I am hopeful that we can continue working through the tensions and wrongs of the past and become a more just and colorblind society.  I hope this new administration will help bring us together, and not further divide us.  I have always found that freedom is the best way to break down barriers.  A free society emphasizes the importance of individuals, and not because they are part of a certain group.  That’s the only way equal justice can be achieved.

We will face more tough economic problems during this new administration.  In fact, the worst is yet to come.  A vast amount of problematic mortgages have not begun to reset their variable interest rates and go into default.   We already have unprecedented deficits, spending is out of control, and more big industries are coming to government with their hands out.  My hope is that this administration will handle this economic crisis better than the interventionists and big government spenders of the 1930’s, the bureaucrats that prolonged the Depression.  I hope that new government programs and spiderwebs of red tape do not pop up to interfere with American productivity, and that we can quickly get our financial footing again.  We have to understand that an economic correction needs to take place and the only way out of the coming recession is to go through it.  Efforts to avoid it can only prolong it.  I hope we can somehow find our way back to sound money and reject corporate cronyism.

We cannot address our budget problems at home without changing our disastrous foreign policy abroad.  I am hopeful that the new administration can take on the mantle of peace and diplomacy in foreign policy that many Americans feel they were promised.  Many other nations also have this hope, which exudes from their congratulatory sentiments offered after the election.  They hope that national sovereignty will be respected.  They hope that through diplomacy violence and war can be averted.  I hope so too.  One thing is unquestionable: our aggressive foreign policy of the past has been costly, in blood and in treasure.  Our treasure is running out, and fewer volunteers are stepping up to enable that foreign policy.  So for these reasons, if we are to continue to have an all-volunteer military, and see prosperity again in the future, I have every reason to hope our foreign policy will change.  In order for it to remain the same, mandatory military service would have to return, as well as accelerated theft through debt and inflation to pay for it.  I have a hard time imagining popular support for these policies, simply for the sake of war and conquest, when we clearly want peace.

I have many hopes for the future in this time of transition.  But I have seen this country face many forks in the road, and sadly take the wrong one too many times.  We have heard a lot of talk, and it remains to be seen what actions and specific policies that talk will translate into.  So while I may be hopeful, I remain deeply concerned about our future.

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Posted in Civil Liberties, Foreign Policy, Monetary Policy | 87 Comments | Permalink

Since the bailout bill passed, I have been frequently disturbed to hear “experts” wrongly blaming the free market for our recent economic problems and calling for more regulation.  In fact, further regulation can only make things worse.

It is important to understand that regulators are not omniscient.  It is not feasible for them to anticipate every possible thing that could go wrong with whatever industry or activity they are regulating.  They are making their best guesses when formulating rules.  It is often difficult for those being regulated to understand the many complex rules they are expected to follow.  Very wealthy corporations hire attorneys who may discover a myriad of loopholes to exploit and render the spirit of the regulations null and void.  For this reason, heavy regulation favors big business against those small businesses who cannot afford high-priced attorneys.

The other problem is the trust that people blindly put in regulations, and the moral hazard this creates.  Too many people trust government regulators so completely that they abdicate their own common sense to these government bureaucrats.  They trust that if something violates no law, it must be safe.  How many scams have “It’s perfectly legal” as a hypnotic selling point, luring in the gullible?  Many people did not understand the financial house of cards that are derivatives, but since they were legal and promised a great return, people invested.   It is much the same in any area rife with government involvement.  Many feel that just because their children are getting good grades at a government school, they are getting a good education.  After all, they are passing the government-mandated litmus test.  But, this does not guarantee educational excellence.  Neither is it always the case that a child who does NOT achieve good marks in school is going to be unsuccessful in life.  Is your drinking water safe, just because the government says it is?  Is the internet going to magically become safer for your children if the government approves regulations on it?  I would caution any parent against believing this would be the case.  Nothing should take the place of your own common sense and due diligence.

These principles explain why the free market works so much better than a centrally planned economy.  With central planning, everything shifts from one’s own judgment about safety, wisdom and relative benefits of a behavior, to the discretion of government bureaucrats.  The question then becomes “what can I get away with,” and there will always be advantages for those who can afford lawyers to find the loopholes.  The result then is that bad behavior, that would quickly fail under the free market, is propped up, protected and perpetuated, and sometimes good behavior is actually discouraged. 

Regulation can actually benefit big business and corporate greed, while simultaneously killing small businesses that are the backbone of our now faltering economy.  This is why I get so upset every time someone claims regulation can resolve the crisis that we are in.  Rather, it will only exacerbate it.

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Posted in Civil Liberties, Monetary Policy | 83 Comments | Permalink