Tuesday, December 15, 2009
Wasting a perfectly good recession
During boom times, anybody can start up a business and do well. You get a huge expansion of business, and people are looking for anything and everything to invest their money into. What'll be the next Starbucks? Why didn't I buy more Costco stock when it was still Priceclub? Let's invest in that .com!
The pendulum will swing. Every time. Over speculation, businesses that really don't provide something or provide it very inefficiently, people putting greed in front of sound responsible business practices....Lots of bubbles burst at he same time and you have a recession.
A recession is a great way to cut out the deadwood. Businesses fail, big and small. The people from those businesses that have something to offer go work somewhere else or even start their own new business. Eventually, if left alone, the recession ends and the strong companies survive to snap up a bigger market share. They earned it.
Along comes our government. TARP funds, stimulus funds, bail outs. It disrupts the natural order and rewards failure. Anytime you artificially shore up profit or income, the economy ultimately suffers. The argument comes up that some businesses are necessary in the event of war, like auto manufacturers. If that is true, then don't hand out bail out money, create a big government contract companies can compete for. At least they'll have to produce something for the money.
When I'm Earth Czar, my econ ministry will only concentrate on eliminating fraud. I will rise to power by preaching trust--trusting people to do the right things. No government can provide all oversight and no system can work unless the majority of folks take it upon themselves to function in a scrupulous manner.
Basically, the best way a government can promote business is to mind their own business, as spelled out in the Constitution.