Letter to my Congressman on the bailout

I’m not usually a big believer in the governmental process as an agent of change, truth, justice, or whatever, and the current issue with the proposed Wall Street and bank bailout plans is no exception. I have very little expectation that my letter will actually in any way influence the decision of the representative for my district. I wrote this more as a way to get some of my thoughts down in one place. That being said, after I wrote it I figured hey, why not go ahead and send it? And now I’m posting it here. Feel free to pass it along or to debate the points presented therein, but realize that it is not a nuanced, technical policy position piece but rather a simplified, rhetorical one.

Dear Mr. Ellsworth,

I see that yesterday you voted in favor of the economic bailout plan that came to the House floor. I urge you to reconsider your position on the bailout. It seems quite disingenuous to provide billions of dollars in taxpayer money to bail out the institutions that have largely created this crisis through their own actions. It smacks of elite classism to allow corporate banking and finance executives to get off with their golden parachutes and allocate vast sums of what is supposed the people’s money to clean up their mess – moreso when it’s a clean up that is highly debatable with regards to its potential efficacy to actually do that which it purports to do.

I believe this so-called bailout plan is little more than an economic version of terrorism. For one, the Treasury and Fed say “give us the keys to the kingdom” of the economy. The proposed bailout as I understand it gives officials the power to essentially take over enormous swaths of the economic sector in an essentially arbitrary fashion, which would result in the economic directors having little-to-no accountability to the people the government and public officials are supposed to serve. The Bush Administration has excelled at taking advantage of crisis situations in order to consolidate power (particularly “emergency” power) under the umbrella of the Executive Branch, and this is just one more example of that tendency.

Furthermore, the bailout is in response to what could be essentially construed as a kind of terrorist threat on the part of the big banks. “Give us billions to fix our mess or we won’t give you house loans, car loans,” and so on. Without credit the economy fails, and those who hold the keys to credit have the ability to hold the people hostage.

The plan would involved the government basically buying assets from the bailed-out-companies above market value, thus providing the banks with a kick start in capital, which is a nonsensical proposition. If the bank owners are unwilling to utilize the market functions to raise the capital, which would ostensibly be both in their self-interest and in the public interest, then the government should only buy the assets at market value – or buy the banks at their market value, nationalize them, and nurse them back into healthy operation until such time as further action can be taken – either selling them to private interests or some other action that would not only return the banking activity to the private sector but also make up for some of the drain of public funds the whole financial crisis has engendered (and the public subsidies that have been involved in the operations of these banks throughout their history). Banks that will not submit to this process can be left to their own, and if they fail then they fail. As Adam Smith said, any business that does not operate within the public interest loses its legitimation.

In other words, if the government is going to intervene in the workings of these banks, as it appears it must, then do it in a way that makes sense and will actually work to making things better in the long run, and let those who are actually responsible for the mess be the ones who are punished, not the American taxpayers.

No capitalist system has ever existed for long without having to be regulated, modified, or bailed out by the government. No national economy that is strong today got to be so by utilizing “free market” principles; all of them, every single one, became prosperous through some form of government intervention/central planning. This case is no different – in voting for the bailout you vote to subsidize the foolishness of the robber barons who got us into this mess in the first place. I implore you to reconsider your position on the bailout and vote “nay” if it comes to the floor again.

Thank you,
Jason Barr
Evansville, Indiana

John Médaille has written quite a good piece at The Distributist Review on the bailout as a response to economic terrorism. TDR is consistently excellent and I highly recommend you read it regularly.

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