Thoughts on the privileges of capitalism and hard work
Armstrong Williams | 1/16/2014, 4:25 p.m. | Updated on 3/18/2014, 2:13 p.m.
In a capitalistic system, “stimulation” of the markets has the same effects on society as recreational drugs do on a human being—it creates an unrealistic euphoria, which is short-lived and painful when the high of the stimulant fades. False stimulation masks reality rather than dealing with it. But the way things really are eventually returns no matter if the stimulant is repeated because, in the end, the government will collapse under the burden of propping up every failed or failing business.
We saw this in the latest economic crisis of the last half of the aughts. When it comes to assigning blame for the debacle, some say the lack of regulation was the main culprit—that what happened is Exhibit A in the case against free market economics. That it was greed at the top—white-collar, high society types who live in Manhattan penthouses—that brought the economy to the proverbial screeching halt. They neither create nor build anything, but instead come up with ingenious ways to shuffle paper and stocks and other financial instruments in order to profit from unsuspecting and ignorant and diffuse shareholders—that’s what brought the economy to the proverbial screeching halt.
Others insist this is a simplistic and incomplete picture of what happened—that those who would blame capitalism aren’t backing the story up far enough. Sure, creative financial profiteers devised financial instruments like “credit default swaps” to earn money not from building or creating anything, but simply by having made a transaction. But free market defenders ask, why were they creating these complex financial instruments? Was it not the existence of millions of subprime loans in the first place that led to the perceived need for the insurance against their failure default that credit default swaps were created to provide? And why were there so many subprime loans on the market in the first place? Is it not the federal government, through the Federal Reserve, that artificially determines the price of money—essentially a “price control”—by setting interest rates?
What if the Fed set interest rates artificially low, thereby qualifying far too many folks for homes they could ill afford? And was it not also a result of government policy—passed by Congress and signed by the president, independent of and in addition to the Fed’s loose money policies—that so many who weren’t eligible to get prime loans on a home were suddenly eligible for subprime loans on homes they really shouldn’t have been buying?
A free market opponent might fire back that it was greedy predatory lenders who created the mess, not those who bought homes from them and certainly not Congress. But no one was forced to buy a home, to make these purchases at gunpoint. In the age of the Internet, I find it hard to believe that folks who were told adjustable rate mortgages were a good thing didn’t decide to check that out on the web. Within minutes, these buyers, who were allegedly duped into purchasing homes, could have been armed with the truth about these risky loans. Or maybe they did but decided to take a shot anyway—in which case I still have to wonder why we feel sorry for the loss of their homes.
Armstrong Williams is the author of the brand-new book “Reawakening Virtues.” Join him 4-5 p.m. EST at www.livestream.com/armstrongwilliams or tune in 4-5 p.m. EST on S.C. WGCV, Sirius/XM Power 128, 6-7 p.m. and 5-6 a.m. EST. Become a fan on Facebook and follow him on Twitter.