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Don't Bail Out Losers

That's the advice of Arthur Laffer on this weekend's Wall Street Journal Editorial Report on Fox News. Transcript here. Or click on the first link and go to about 1/4 of the way through. It's all good.

...the stimulus package, I don't think it's going to help the economy, Paul. You can't bail someone out of trouble without putting someone else into trouble. If you spend that money bailing losers out, like the auto companies and some of the other companies, those moneys come from winners and it just hurts the economy long run. That that's really the essence of what our book is all about is how, in the long run, these taxes will have to rise and it will do a lot of damage to the economy.

I think I have my tea party sign figured out:


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Comments (11)

Liberal response: "It's al... (Below threshold)

Liberal response: "It's all George Bush's fault!" Conveniently forgetting who has been running Congress for the past TWO years.

The problem is too many peo... (Below threshold)

The problem is too many people feel that bailouts will either (a) directly benefit them (i.e., those facing foreclosure), (b) indirectly benefit them (i.e, those not behind on their mortgage who think the bailout will stabilize housing prices), or (c) have no impact on them whatsoever (so why bother objecting?).

And it isn't just these bailouts, the above applies to pretty much every action the government takes, whether economic, social or foreign policy. (truism #1: something that enough people really don't like doesn't get done. truism #2: there ain't enough tea partiers to amount to anything more than a hill of beans).

That's why we have the tax structure we have, the earmarks, the move towards socialized health care and so on. Not enough people see these as affecting them in a negative way. Per a letter in today's WSJ, people aren't going to object to Obama's budget if they think they're in the 95% who isn't going to have to pay for it.

Don't Bail Out Los... (Below threshold)
Don't Bail Out Losers...Unless You Are Bush, Then I Don't Have A Problem...PS: Go Ahead And Bail Out Companies That Will Help Us Avoid Complete Financial Meltdown, Like Major Banks. Kthxbai.
"Government is the great fi... (Below threshold)

"Government is the great fiction through which everybody endeavors to live at the expense of everybody else." Frederick Bastiat.

Whether proposed by George Bush and Hank Paulson, or Barack Obama and Timmy Geithner, the bailouts are simply stealing from one group to give to another. Our "Robin Hood" government knows best. The problem is that using the force of government rather than the market to decide the winners and losers just doesn't work. It will only lead to more bailouts, more regulation and more economic misery.

Americans are waking up to ... (Below threshold)

Americans are waking up to people like Bastiat, Hayek, and von Mises. Unfortunately, Congress isn't figuring it out.

The economy is not a zero s... (Below threshold)

The economy is not a zero sum game.

I don't know. In a way the ... (Below threshold)

I don't know. In a way the stimulus can help the economy. Tough love, I'm all for it. But if you don't give even just a little nudge to the financial "losers" then they will forever remain as losers. This isn't a contest, we should all help each other even in just small doses.

Ben Dover Ben Dover send Ba... (Below threshold)

Ben Dover Ben Dover send Barry right over

This is based on the notion... (Below threshold)

This is based on the notion that there is only a set amount of value in the world, and so giving value to one people means taking it or denying it someone else - simply is not true in reality.


I'm just saying.

Money isn't only value once - if spent right, it's investing. Think of it as seed - you can eat it, or you can plant it and water and, if done right, you can get many thousands of times more food than if you just ate the seed.

In that metaphor, if you give extra seed to those who will plant it, they will grow more food *and* seed - and benefit everyone you trade with.

You see?

And to continue the metaphor - if a farm has a run of bad luck which may even be their stupid fault, and they don't have enough seed for a year - a smart community will front them the money for that seed. Because a farm that produces something is worth more than a farm that goes fallow for a year, gets covered in weeds, and then takes two years to recover even once the farmers can buy their own seed again.

You see the metaphor?

That's why "Bailing out losers" is in everyone's best interest - not just the losers. Because the economy is interconnected.

That doesn't mean that bailing out can be done wrong, and it doesn't mean that people should always be saved from their folly. It just means that it's not **always** a mistake to bail people out either. Once again, sometimes it really is in everyone's best interest.

Jim, Using a farm a... (Below threshold)

Using a farm as example that goes fallow
is not the same as bailing out/enabling
Farm land that goes fallow through intent or
through wrong decisions always benefits.
Fallow land is allowing the soil to rest, which
is healthy and wise.

Jim, Your metaphors are apt... (Below threshold)

Jim, Your metaphors are apt - to a point. What you forget is there is not only one farm or farmer. There are other farmers who may not have made a "mistake" or have better, more efficient, ways of farming. I presume you would like a choice to whom your support (investment) would go.






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