Tuesday, September 30, 2008

On Wall Street, who is paying the piper?

Taxpayers should not be funding corporate mistakes.

Yesterday, members of the House of Representatives shot down a $700 billion Wall Street bailout deal. They made the right decision , or at least a plurality of them did.

Fiscally irresponsible businesses should not be artificially resuscitated.

I have a hard time feeling bad for financial institutions who are struggling because they made risky, and in many cases irresponsible, investments. It’s their prerogative to take risks if they chose, but if those investments don’t pan out they need to take responsibility for the consequences.

Not surprisingly, companies who have been reckless with their money over the past five or ten years are now struggling, flat-out crumbling in fact. That is as it should be. Bad businesses should go out of business. It’s the economic version of natural selection, or Economic Darwinism, if you will.

By bailing out companies who engaged in high-risk behavior, the government is sending a message that other corporations can screw up and taxpayers will just bail them out. We cannot be a society that rewards that kind of behavior. If you’re reckless with your money, eventually you’ll have to pay the piper. I’m not going to pay him for you.

Personal moral objections aside, the bailout is just bad policy.

It’s a simple law of supply and demand that when the market falls, prices will follow. Intervention like this, however, could prevent prices from keeping up (or in this case going down) with the market. And the market won’t recover fast enough to make up for the disparity. So prices will stay the same but we’ll still be hurting from the market’s decline. I think we used to call that stagflation, although this may be a milder case.

I always see a little red flag go up whenever politicians, on either side of the liberal/conservative fence, advocate plans that defy their party’s core beliefs. Republicans, theoretically, believe in smaller government and less interference. So shame on President Bush for acting like such a liberal. It should send up an even larger red flag when a Republican president can’t get members of his own party to support his legislation. That alone is not enough to disprove the quality of the proposal, but in my opinion it warrants a closer look.

America has never been a nation that likes to sit back and watch things happen, but allowing the market to self-correct will be the smoothest solution to this temporary financial crisis.

Thursday, September 4, 2008

McCain-Palin is a winning ticket

John McCain is brilliant. Some have called the GOP presidential candidate crazy in the wake of his VP selection, but Alaska Governor Sarah Palin fills a void in the Republican ticket that only a socially conservative, small town hockey mom could.

Palin both balances the ticket and shakes it up. McCain was smart to chose a woman: whoever wins the election in November, it will be a red letter day in American history. If Obama wins, he’ll be the first black president. If McCain wins, Palin will become the first female vice president. He couldn’t choose another old white guy (although Obama was smart to add one to his ticket), and a female candidate adds variety without competing with the diversity on the Democratic ticket.

Luke warm feelings about McCain and his pseudo-conservative views have recently left Republicans with little to rally for, save a mutual dislike for Barack Obama. But Palin has sparked excitement in the party. She’ll draw votes from Bible Belt conservatives who, when it comes down to it, choose their candidates based more on shared social beliefs than political experience.

She’s the LBJ to McCain’s JFK.

Palin’s sharp wit is exactly what Republicans need to counter Obama’s epic rhetoric. While Democrats are swooning over Obama, I’m betting the Republican faithful will be lining up around the block to listen to one of Palin’s speeches. She’s a natural in a way that McCain, for all his Washington experience, could never hope to be. Her speech at the Republican National Convention last night proved it.

Of course, Palin can’t hope to draw Clinton supporters to vote Republican, as has been recently suggested. But I don’t think that was ever McCain’s plan. It’s insulting to both liberal and conservative voters to argue that they will vote for a candidate because she has the same gender as someone they supported in the primary election. McCain is a maverick in part because he doesn’t really follow the conservative philosophy of his party. If the GOP ticket failed to appeal to social conservatives (a significant and sizable demographic), McCain risked losing those votes, and probably the election. Adding Palin to the ticket helps voters forget, if only temporarily, that McCain is barely a Republican by traditional standards.

Palin’s dysfunctional family only adds to her appeal. It’s been proven again and again that Americans are endlessly forgiving of personal or social indiscretions (as long as you don’t do it with their money or lie about it later). Having a pregnant, unwed daughter only serves to humanize the vice presidential candidate and makes her a champion not only for pro-life ideals but family values as well. The Democratic ticket will have a hard time competing with that.