Walter E. Williams

The agendas of liberals, progressives and assorted tyrants desperately depend on the aspects of human nature they often condemn, such as acquisitiveness, profit motive, self-interestedness and greed. This crossed my mind while reading "How Departures From Economic Freedom Can Affect Freedom In General," by Dr. John Taylor, a Hoover Institution scholar. Taylor tells how former Wells Fargo CEO Dick Kovacevich was forced to take Troubled Asset Relief Program funds even though Wells Fargo did not need or want the funds. Kovacevich was threatened that if he did not accept TARP money, regulators would declare his bank capital-deficient even though Wells Fargo had a triple-A rating. At the time, October 2008, Wells Fargo was in the process of acquiring Wachovia, and to be declared capital-deficient would have killed the deal. U.S. Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke could rely on acquisitiveness, profit motive and self-interestedness to bully Wells Fargo into accepting TARP money. They also knew that Wells Fargo's competitors would go after Wachovia. If all sound banks had refused TARP money, Paulson and Bernanke's tyrannical threats would have failed.

Imagine a person was ordered by the U.S. Fish and Wildlife Service not to harvest timber on land that he owned because it threatened the habitat of the red-cockaded woodpecker. What would the average agency tyrant propose in order to make him obey? If you said levy a fine, you'd be absolutely right. If he were to continue to disobey the order, he'd face the imposition of a higher fine. The agency tyrant's behavior simply acknowledges the first fundamental law of demand, which correctly predicts that the higher the cost of doing something the less people will do it. Conversely, the lower its cost the more people will do it. There are no known exceptions to the reality of the law of demand.

Though the law of demand is not rocket science, liberals and progressives sometimes pretend it doesn't exist. Suppose one wants to reduce the number of rapes, robberies and homicides. Should we raise or lower the cost of committing such acts? Though the death penalty exacts a high cost for a homicide conviction, most liberals and progressives are against it. Some liberals and progressives don't hold criminals responsible, because they believe that poverty and discrimination are the cause of crime and that it's society that must be cured. Others think that soft sentences and rehabilitation programs reduce criminal behavior. Both visions lower the cost to criminals of committing a crime.


Walter E. Williams

Dr. Williams serves on the faculty of George Mason University as John M. Olin Distinguished Professor of Economics and is the author of 'Race and Economics: How Much Can Be Blamed on Discrimination?' and 'Up from the Projects: An Autobiography.'
 
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