While you watched the circus consuming Washington regarding the needless bonuses going to AIG employees, you were provided with a cornucopia of finger-pointing and ducking. The question to be asked is who is really responsible, and you may be as much as anyone else.
As capitalists, each person has a responsibility in today’s world to protect against the incursion of governmental intervention breaking down the walls between our successful private industry and the limited government this country has always maintained and desires.
The unseemly scenario of auto executives groveling at the feet of feckless members of Congress should sicken anyone who cares about freedom and the capitalist system. Executives, who for years made poor decisions by providing unsustainable benefits to themselves and employees, were the proximate cause of having to put themselves in the hands of totally unqualified elected “Solons” that have long-term interests significantly contrary to their own. They provided health care benefits devoid of personal responsibility, then tried to foist the cost upon the American people -- helping to cascade us toward a nationalized health care system. These are irresponsible capitalists acting badly. They and their predecessors deserve to be in capitalist hell for eternity.
Concurrent to this, our investment gurus have played into the hands of the misguided idealists who believe government-centralized decisions improve the lives of the masses. Certainly this process started with a poorly written law called the Community Reinvestment Act (CRA). Even though Congress stated that it was a result of private industry acting badly by redlining certain areas and individuals, as almost always happens, Congress created a monster with long-term debilitating consequences.
That was not good enough for the government wonks -- they wanted more. In 1999 they expanded the mission of Fannie Mae and Freddie Mac by encouraging them to accept even riskier loans from unqualified buyers.
The big banks and investment houses responded by feeding the requirements. They did not argue that the loans were irresponsible, nor did they even evaluate the buyers. If it passed the muster of the government agencies and they could bundle the bad loans to be sold to unsuspecting buyers, then “damn the torpedoes, full speed ahead.” In fact, they fed this monster by creating a false form of insurance called Credit Default Swaps (CDS). Even after the government refused to buy the loans they held these diseased assets in their own portfolios to generate short-term fees. They became so addicted to fees that inflated their current income that they began to believe this game would never come to an end.
When it inevitably did, they came crying to the same people who started this Ponzi scheme. They put their faith in the federal government to save them. Maybe they expected these elected officials to share responsibility for this debacle, but no one owned up to creating these bad laws. They even denied the Bush Administration’s attempts to rein in Fannie Mae and Freddie Mac, which they stopped. Stupid, selfish capitalists once again felt they could game the inept lawyer-types running Congress, but forgot that when ice cream turns to mud they are nowhere to be found.
We now have 536 screaming banshees pointing fingers at everyone other than themselves regarding the bonuses paid to AIG employees. AIG argues the bonuses are contractual, but then say they are retention bonuses. How can they be both, and how can they be paid to employees who have left? How can the people at AIG be so selfish and be so tone deaf? At least the CEO who is working for $1 has some sense.
Recently I was told that some of the credit card companies were cutting down the limits that some business people have on their cards. Companies did this with little or no notice to the cardholders. When the balance exceeds the new limit, the cardholders are being charged interest and fees for the excess amount. Do the credit card companies really think these immoral actions are not going to drive consumers into the hands of the government wonks? This is just another case of capitalists behaving badly.
Each and every time you make a decision about your business, you need to determine not only the current economic benefits for you and your fellow employees, but how it will impact society. Taking a loan you cannot repay not only harms you, but harms the capitalist system. Making charges on a credit card that you know cannot possibly be paid off affects all of us. Hiring an employee and not providing proper benefits just ends up with more governmental intervention.
Each of us has a responsibility to protect the capitalist system that has provided the finest lifestyle for the largest number of people in history. Each of us has been guilty of undercutting that system. Next time, think before you act or you may become the next whipping dog for a duplicitous Congress. There is a responsibility level to being a capitalist.