« Will Obama's Bankruptcy Plan Doom Chrysler? | Main | The Fiendish Plot of Popeye's Chicken »

The recession may be over -- but how will we spark a true recovery?

MarketWatch is reporting that Rupert Murdoch, the billionaire media tycoon and infamous founder of the dastardly Fox News channel, believes that the current recession may be coming to an end:

Speaking to analysts on a conference call, Murdoch said: "There are emerging signs in some of our businesses that the days of precipitous declines are done and that revenues are beginning to look healthier."

I hope Murdock is right, and that the economy has already bottomed out and is ready to begin expanding again. The last nine months have been harrowing, with heavy job losses and 40% - 50% losses in the stock market. All of us want to see a recovery, because we all want to begin earning back what we have lost.

Funny thing, though -- liberals have recently been foaming at the mouth about conservatives actually wanting economic recovery to fail! Their reasoning seems to be that since we all "hate" Barack Obama (we're all racists, you know), we are trying to do everything possible to make sure that our economy is destroyed, so that Obama won't get re-elected in 2012. Yep - we're going to destroy America simply because we can't stomach the notion of having a black man in charge. Of course this makes about as much sense as the rest of the smears that liberals have been slinging at conservatives for the past forty years. I mean, really ... what a great way to win elections -- "We starve children! We make grandmothers eat dog food! We poison your water! We poison your air! We want to re-institute slavery! We club baby seals! We're the Republican Party, and WE WANT YOUR VOTE!!!"

Liberals seem to have a difficult time understanding the difference between wanting the implementation of potentially harmful policies to fail, versus wanting the nation or economy as a whole to fail. Maybe this has something to do with their mindset during the past eight years. But whatever the reason, they are way off target.

Last week, the Obama Administration attempted to manipulate the settlement proceedings for the bankruptcy of Chrysler. Obama insisted that secured creditors settle for 29 cents on the dollar, while at the same time rewarding the UAW pension fund with a 55% share of the emergent company's common stock. This is an unprecedented action; it cannot be traced to any application of known bankruptcy law, and it appears (at least on the surface) to be nothing more than a huge political reward by the Democrats for the steadfast financial support of the UAW.

Liberals may applaud such tactics because they seem to serve the "common good" (i.e. "workers" triumph over "the rich"), but conservatives are appalled by them, because history tells us that government interference in private contracts is ultimately harmful to long-term economic growth. When conservatives oppose large-scale government interference in private business, it is because such interference always leads to higher risk, decreased investment, and the abuse of power through cronyism. It has nothing to do with "greed" or "making the rich richer while the poor stay poor."

A few years ago, Peruvian economist Hernando de Soto authored a book entitled The Mystery of Capital, in which he explored the differences between Western states that consistently apply the rule of law, and Third-World or "banana republic" dictatorships that allow ruling elites to nullify private contracts and seize and redistribute wealth subjectively, whenever they feel like it. de Soto concluded that the rule of law is essential for any kind of long-term, sustained economic growth.

He also pointed out that even if individuals are allowed to earn and keep a modest amount of wealth, strong overall economic growth will be stunted unless those individuals are willing to invest their wealth. The willingness of an individual to invest their wealth is directly proportional to the risk involved in that investment. The rule of law, and its resulting establishment of a system where everyone, rich or poor, peasant or aristocrat, is treated as equally as possible, is what lowers investment risk to an acceptable level. On the other hand, widespread state interference substantially increases investment risk, because investors cannot be assured that their money will be safe if the government decides to void private contracts and subsequently confiscate and redistribute capital.

Just how extensively can state interference harm a multi-billion-dollar company? We needn't look any further than Venezuela's state-owned oil company, PDVSA. In the 1980's and 1990's PDVSA was one of the best-managed oil companies in the world. It earned an enormous amount of money, and thus became a very tempting target for Venezuelan President Hugo Chavez. In 2002, workers and managers at PDVSA who were concerned about Chavez's plans to prevent any chance of privatization for PDVSA organized a lock-out that shut down Venezuelan oil production for nearly two months. Chavez's political operatives ended the lock-out through coercion and intimidation. The organizing workers were fired, and the new PDVSA management organized an armed militia to prevent any future uprisings.

Once Chavez gained complete control of PDVSA, he took over the company's luxurious high-rise headquarters in Caracas and turned it into a tuition-free public university for all Venezuelans. He also diverted the company's enormous cash revenue into the government coffers, and proceeded to give away a substantial portion of it in the form of state subsidies. And he appointed political allies and cronies to take the place of the experienced business managers and petroleum engineers who had been terminated. These men had no experience in the petroleum industry, and oil spills, fires, and other problems quickly became common-place. The quality of refined petroleum products also suffered. Chavez turned PDVSA into virtually the sole source of revenue for his government, and in the process he shut the company's books, completely eliminating any kind of accountability. He gambled that continually rising oil prices would continue to make up for its poor management.

While American oil companies have stayed profitable through last year's sharp spike and subsequent crash of oil futures pricing, PDVSA ended up in deep trouble. It has lost its major line of credit, it has been forced to cut salaries and drastically reduce spending, and it has also been forced to issue $2 billion in bonds in order to cover its debt. But even that isn't enough. Faced with unrest from independent Venezuelan oil service providers who haven't been paid in months, Chavez has ordered their private assets to be seized, and a large portion of the oil service industry nationalized.

Every time it has been tried, nationalization and government control of industry has produced similar results. If our current recession has really bottomed out and the worst times are behind us, then we must do everything we can to ensure that we have a strong free market that produces an actual economic recovery. Because the Democrats insist on giving us a massive, suffocating expansion of government power instead, we will continue to oppose them. If that makes us greedy racists, then so be it.


TrackBack URL for this entry:

Listed below are links to weblogs that reference The recession may be over -- but how will we spark a true recovery?:

» Wizbang linked with Birds of a Feather

Comments (7)

Rupert is trying to 'talk u... (Below threshold)

Rupert is trying to 'talk up' his businesses. Given Obama's "plans", I doubt the economy is going to 'recover' any time soon.

The "recession" isn't anywh... (Below threshold)

The "recession" isn't anywhere close to being over. And agree with GarandFan: Murdoch is just pumping his investments.

Also: am I the only one struck by how accurately Chavez's antics with PDVSA mirror scenes from "Atlas Shrugged"...?

Man,just a thought, but I w... (Below threshold)

Man,just a thought, but I wish Rupert would try to buy/takeover General Electric. Think about it.
That would be so killer.Hahahahahaha

The "recession" isn't an... (Below threshold)
Jeff Blogworthy:

The "recession" isn't anywhere close to being over.


Obama's war on corporations and the private sector is going to have far reaching and enduring consequences. Not to mention his wacky hyperinflation/hypertaxation plans.

Good thread.<blockquo... (Below threshold)

Good thread.

we are trying to do everything possible to make sure that our economy is destroyed, so that Obama won't get re-elected in 2012.

Oh, I believe it! This is why Obama orchestrated flying planes into the World Trade Center in 2001, so he could win the election in 2008.

I'm inclined to agree that ... (Below threshold)
John S:

I'm inclined to agree that the recession is bottoming, (if you jump off a cliff, you eventually stop falling). I'm just not convinced that there will be any kind of recovery. But Republicans don't need to wish for bad economic news. Obama Stalin and Zimbabwe Bernanke will see to that. Enjoy the cheap gas this summer. Take the family for a drive. It is your last chance. In 15 months you'll be grubbing empty store shelves for a $45 loaf of bread trying to feed that family.

Keep sticking your fingers ... (Below threshold)

Keep sticking your fingers in your ears and stomping on the floor.

If Obama does manage to pull us out of this recession, then what will you people do? Interested to know, since your eight years of failed policies and your consistently wrong answers to everything show how oblivious you are to what really works.

When will you finally admit that you have no idea what you're talking about most of the time? The rest of us already know this about you. Time to grow up, stop following ridiculous fears (socialism, end-of-the-world, etc.) and listen to people who really understand what their doing.






Follow Wizbang

Follow Wizbang on FacebookFollow Wizbang on TwitterSubscribe to Wizbang feedWizbang Mobile


Send e-mail tips to us:

[email protected]

Fresh Links


Section Editor: Maggie Whitton

Editors: Jay Tea, Lorie Byrd, Kim Priestap, DJ Drummond, Michael Laprarie, Baron Von Ottomatic, Shawn Mallow, Rick, Dan Karipides, Michael Avitablile, Charlie Quidnunc, Steve Schippert

Emeritus: Paul, Mary Katherine Ham, Jim Addison, Alexander K. McClure, Cassy Fiano, Bill Jempty, John Stansbury, Rob Port

In Memorium: HughS

All original content copyright © 2003-2010 by Wizbang®, LLC. All rights reserved. Wizbang® is a registered service mark.

Powered by Movable Type Pro 4.361

Hosting by ServInt

Ratings on this site are powered by the Ajax Ratings Pro plugin for Movable Type.

Search on this site is powered by the FastSearch plugin for Movable Type.

Blogrolls on this site are powered by the MT-Blogroll.

Temporary site design is based on Cutline and Cutline for MT. Graphics by Apothegm Designs.

Author Login

Terms Of Service

DCMA Compliance Notice

Privacy Policy