Last week, President Obama infamously said that if you built a business in America, you weren't really responsible -- the government was. You didn't get ahead because you were smart or worked hard, or a combination of the two. Only the government could allow you to rise above your station.
Obama took a lot of flack from commentators for this comment. There's only one problem: He was right.
He wasn't right because that's the way things should work. But increasingly, it's the way things do work.
That's why, two weeks ago, Sen. Chuck Schumer, D-N.Y., begged Federal Reserve chairman Ben Bernanke to do something to boost the economy prior to the 2012 election. "Despite two false starts, we're having a much rougher time than we ever imagined getting unemployment down," Schumer complained. "So get to work, Mr. Chairman." After all, there's an election coming up -- and unless Bernanke boosts President Obama, the incumbent faces trouble.
Bernanke quickly disassociated himself from Schumer's comments. "We will act in an apolitical, non-partisan manner to do what is necessary for the economy," said Bernanke. "We have said we are willing to take further action ... it's very important that we see sustained improvement in the labor market."
Less than two weeks later, The Wall Street Journal reported that Federal Reserve officials were moving closer to inflating the currency yet again. "Many officials," the Journal reported, "appear increasingly inclined to move unless they see evidence soon that activity is picking up on its own."
It should be troubling to Americans that the fate of our economy rests, essentially, in the hands of one person. Centralization of economic power is a terrible risk -- especially when, as with Ben Bernanke, the person in charge has been less than competent. Bernanke, it was reported last week, did virtually nothing to alert the general public to bank manipulation of the all-important Libor rate, a rate used by banks to lend money to one another. The Libor rate is so important that it sets approximately $800 trillion in financial instruments. According to The Economist, this is the biggest "securities fraud in history." And Bernanke did virtually nothing to stop it, and absolutely nothing to let the public know.
And this is the fellow we have put in charge of the world's leading economic driver.
Now, it's not Bernanke's fault that he can't handle the task of running the global economy. No individual can. That's the beauty of both capitalism and democracy -- the idea is that collective intelligence generally trumps individual intelligence. No matter how smart Einstein was, the agglomerated knowledge of the rest of the world's population dwarfed Einstein's. And when it comes to making personal financial and business decisions, no one person can be expected to know everybody's priorities, preferences and desires.
That's why the decentralization so integral to capitalism works so well. And that's why businesspeople all over America are running scared from a newfangled economic system that puts one or two men at its head. If they change their mind, the whole economy changes over night. When Ben Bernanke decides to inflate the currency, markets respond; when he decides not to, markets also respond. There's been no change in the underlying business value of the various enterprises around the country. Ben Bernanke just sneezed, and we all jump.
That's a problem. But it's a problem Obama likes. He wishes that folks like Bernanke had more control -- they could build our businesses for us or redistribute business assets as they saw fit. More czars would mean more businesses. Bigger government would mean bigger financial gains.
It's nonsense. And that's why Obama's still wrong. Unfortunately, though, his vision is now becoming a reality.
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