Spending Other People's Money Is Inherently Corrupting

by Don Boudreaux on May 19, 2009

in Intervention

This George Will column is a must-read.  Here's its spot-on conclusion:

The Obama administration's agenda of maximizing dependency involves
political favoritism cloaked in the raiment of "economic planning" and
"social justice" that somehow produce results superior to what markets
produce when freedom allows merit to manifest itself, and incompetence
to fail. The administration's central activity — the political
allocation of wealth and opportunity — is not merely susceptible to
corruption, it is corruption.

Be Sociable, Share!

Comments

comments

54 comments    Share Share    Print    Email

{ 27 comments }

Babinich May 19, 2009 at 8:58 pm

Bravo Mr. Will…

“In the long run, the aggregate of decisions of individual businessmen, exercising individual judgment in a free economy, even if often mistaken, is less likely to do harm than the centralised decisions of a government, and certainly the harm is likely to be counteracted faster.” – Sir John James Cowperthwaite

AMATI NONYMUS May 19, 2009 at 10:13 pm

"
the political allocation of wealth and opportunity — is not merely susceptible to corruption, it is corruption.
"

Now let me get this straight. Bankers stole our money then blew it on some foreign broads. Now politicians are saying, "don't cry, baby. You don't have cry, bankers. We will get you some more money. We can take it from Fort Knox and from the stupid taxpayers. They don't have any guns and we do."

"But baby, they don't have any jobs since we sold all their factories to Chinese. They don't have any money and credit is maxed out. Additionally, I saw some of their guns."

"We are going to take those guns away from them and charge them a disposal fee. If they can't cough up the money we will put them into income tax prison."

"But they can't get into prison. They don't have enough illicit drugs to satisfy the requirements of the prison guards."

"Don't worry, bankers. We will charge them surgical fee for unnecessary operations, remove and sell on the Adam Smith Free Market all of their excess livers kidneys, and other extraneous organs. But before surgery we will sell their blood."

"Can one of my neo-Nazi friends do the medical consult?"

"We will pay him top dollar."

"You got Euro? He won't take inflated currency"

Es tut mir Leid
!

Joe May 19, 2009 at 11:11 pm

Exquisite quote Don, and Babinich as well.

muirgeo May 20, 2009 at 12:38 am

"…that somehow produce results superior to what markets produce when freedom allows merit to manifest itself…

G Will

As always I must be missing something. Didn't the market just produce an economic catastrophic implosion that destroyed trillions of dollars of wealth AFTER transferring much from one class of people to another? Is that the market that produces superior results all based on merit??

And then there's this;

"…the political allocation of wealth and opportunity — is not merely susceptible to corruption, it is corruption."

Wasn't it a political allocation of wealth to allow Wall Street and the Shadow banking industry to concoct toxic products really designed for nothing except to defraud homeowners, consumers and retirement plans.

Yeah there is a battle for wealth allocation and both sides are playing through the government. The government is supposed to be representing the people but since corporate America holds the wealth they get much more input and disproportionately represented. The idea that one side is some how getting it meritoriously by inventing all sorts of fancy paper and investment schemes while the other side is that is working and actually producing things for a living is somehow stealing it when it was theirs to begin with is hard to understand coming from people who claim to care about real markets.

Sam Grove May 20, 2009 at 1:58 am

As always I must be missing something. Didn't the market just produce an economic catastrophic implosion that destroyed trillions of dollars of wealth AFTER transferring much from one class of people to another?

Why are you here? YFI

There was no wealth destroyed, it was faux wealth created by the accounting magic of the FED.

All the market did was uncover and destroy the illusion.

MWG May 20, 2009 at 2:18 am

"As always I must be missing something."
-Muirdog

Finally. Something we can all agree on.

muirgeo May 20, 2009 at 3:37 am

There was no wealth destroyed, it was faux wealth created by the accounting magic of the FED.

All the market did was uncover and destroy the illusion.

Posted by: Sam Grove

Why am I here??? Why are you here Sam? You can't even be honest with yourself.

When your job is to protect asserts and allocate resources and you fraudulently mis-allocate resources and put the worlds resources and markets at risk and the economy fumbles and production takes a dive and wealth is redistributed from the producers to the scavengers YOU HAVE DESTROYED WEALTH! Only an full blown idiot would deny that. "No wealth was destroyed"…that's just dumb as dirt!

dg lesvic May 20, 2009 at 3:37 am

That last one was too hilarious.

Mathieu Bédard May 20, 2009 at 4:09 am

That was a very interesting read, with many very important points, thanks for the heads-up.

Per Kurowski May 20, 2009 at 7:19 am

muirgeo gently asks “As always I must be missing something. Didn't the market just produce an economic catastrophic implosion that destroyed trillions of dollars of wealth AFTER transferring much from one class of people to another? Is that the market that produces superior results all based on merit??”

No muirgeo, again, for your information, what originated the economic catastrophic implosion that destroyed trillions of dollars of wealth were the financial regulators playing God and interfering with the risk allocation processes in the financial markets, in the most amazing way, by allowing for a 62.5 to 1 leverages (that in some cases can even reach 179 to 1) all based on some credit rating agencies awarding their triple-As. Without their regulatory innovations nothing of this sort would have happened.

Randy May 20, 2009 at 7:20 am

Sam,

"All the market did was uncover and destroy the illusion."

Exactly.

geoih May 20, 2009 at 7:50 am

Quote from muirgeo: "Yeah there is a battle for wealth allocation and both sides are playing through the government."

And yet you continue to promote government as the solution to the problems created by government. Are you even listening to your own words?

Maybe if you stopped prattling on about what government is "supposed" to be, and focus on what government actually is, then you could make some progress toward seeing what you are "missing".

Superheater May 20, 2009 at 8:04 am

Spending other people's money is the primary function of political institutions.

muirgeo May 20, 2009 at 8:26 am

"by allowing for a 62.5 to 1 leverages (that in some cases can even reach 179 to 1) all based on some credit rating agencies awarding their triple-As. Without their regulatory innovations nothing of this sort would have happened."

Posted by: Per Kurowski

Wow that's some great pretzel logic. By deregulating they were over regulating. Yeah sure …whatever you say Einstein.

Seth May 20, 2009 at 10:13 am

Thanks Don. I started reading Will's column last week, but bowed out before his last great paragraph. I bowed out because I could hear the voices of my liberal friends justifying the administration's threats with California.

"All the market did was uncover and destroy the illusion." Sam Grove

Sam, Very well said. Thank you.

I would add that the market exactly did its job by ferreting out the painful truth. This is something that many can't stomach or don't wish to recognize.

Not recognizing government's role in the creation of the toxic asset illusion is either dishonesty or ignorance.

Per Kurowski May 20, 2009 at 10:17 am

muirgeo “Wow that's some great pretzel logic. By deregulating they were over regulating. Yeah sure …whatever you say Einstein.”

Looks like I have to spoon feed it. If someone tells you if you lend to someone who do not have a AAA then you can only go 12 to 1 but if you lend to someone who has an AAA then you can go to 62 to 1… does it sound like deregulation? Does it not sound like a hefty interference?

Per Kurowski May 20, 2009 at 10:29 am

Who regulates the most?

A mother who orders all kids to bed at 8 or a mother that would allow those who have baked a cookie that Uncle John likes to stay up until 10. Clearly the second mother who is trying to induce the children to waste precious time baking some useless cookies for Uncle John and whom by the way only she likes

John May 20, 2009 at 10:33 am

muirgeo,
Changing the numbers in a regulation is not deregulation. It is modified regulation.

Deregulation is the removal of regulations.

The financial market was not deregulated.
The regulations were modified, not removed.

So the problems were not a result of deregulation.

muirgeo May 20, 2009 at 10:44 am

Looks like I have to spoon feed it. If someone tells you if you lend to someone who do not have a AAA then you can only go 12 to 1 but if you lend to someone who has an AAA then you can go to 62 to 1… does it sound like deregulation? Does it not sound like a hefty interference?

Posted by: Per Kurowski

I'm not sure there is anything wrong with that. Just because you can lend more with triple AAA doesn't mean you can fraudulently label everything triple AAA.

It's like me thearing I get an insurance discount if my daughter is an A student and then telling the insurance company she gats all A's when she really has all C's.

Come on Per. You are better then this.

Methinks May 20, 2009 at 11:57 am

"As always I must be missing something." – Muirdiot

Yes, useful idiot, as always you're missing something. As always, somebody tries to cut it up into manageable chunks and spoon feed it to. As always, your grossly underdeveloped intellect can't cope with even the most dumbed down explanation.

Sam Grove May 20, 2009 at 2:00 pm

When your job is to protect asserts and allocate resources and you fraudulently mis-allocate resources and put the worlds resources and markets at risk and the economy fumbles and production takes a dive and wealth is redistributed from the producers to the scavengers YOU HAVE DESTROYED WEALTH!

Oh clueless one.

What wealth was destroyed?
What food was buried in the earth, how many houses were bulldozed, how much industrial product was dumped into the deep sea?

Tell us, what wealth existed that now no longer exists because of the meltdown?

People, including many in the financial industry, were fooled by the faux wealth created by the credit expansion instigated by FED policy.

The wealth you believe was destroyed was wealth that was expected to be created in the future. That expectation is what was destroyed.

All that really changed was the numbers in the many accounts where that faux wealth had been recorded. The main thing that changed for many people was a reduction in their expectations.

Don't worry, I don't expect you to comprehend that, but others may.

Now if you wish to see a real destroyer of wealth, look to your sainted government, all those resources devoted to systems and objects for the purpose of destroying the wealth of other people.

I really don't understand how you can persist in being so clueless.

It must be ideological binding that keeps you from perceiving this economic reality.

muirgeo May 21, 2009 at 3:13 am

The wealth you believe was destroyed was wealth that was expected to be created in the future. That expectation is what was destroyed.

Posted by: Sam Grove

Again more baloney. Because the credit markets are so screwed up by free market "financial innovation" factories sit idle, men are not productively working and investments have stalled and will so for months and years to come.

Likewise money from the past that was misallocated could have been providing more road builders, more nurses, more teachers and better drugs. Instead time and effort and man hours went to chasing worthless paper.

Speculation, pure worthless casino economics is the name of the game with unregulated markets. Totally inefficient, inequitable, boom and bust … a pipe dream for the group think that is libertarianism.

And Methinks I just love being called an idiot by you of all people. My position on the nature of derivatives and deregulation has been vindicated over and over by experts throughout the economy while your position of attempting to shout me down, name call and basically lie about the reality of what happened to this economy has been shown to be a fools errand.

Randy May 21, 2009 at 6:38 am

Muirgeo,

"Likewise money from the past that was misallocated could have been providing more road builders, more nurses, more teachers and better drugs."

Revealed preference. Apparently people don't want these things enough to pay for them.

Its a luxury economy, and yes, a gambling economy. So what? If luxuries and gambling are what people want then that's just what they want. Who are you to tell them that they "should" want the things that you want?

Randy May 21, 2009 at 6:41 am

P.S. If that money hadn't gone into the things that people want then it wouldn't have gone anywhere. The time spent to create it would have gone into leisure.

Liberty is worth working for. Society is not.

Sam Grove May 21, 2009 at 11:46 am

"Again more baloney. Because the credit markets are so screwed up by free market "financial innovation" factories sit idle, men are not productively working and investments have stalled and will so for months and years to come."

I'll rephrase the question:

What created wealth was destroyed?

"Likewise money from the past that was misallocated could have been providing more road builders, more nurses, more teachers and better drugs."

You are perhaps unable to answer the question of why resources were misallocated.

This is the thrust of the Austrian business cycle theory, that the expansion of credit and money by the central bank leads investors to direct resources into unsustainable projects, unsustainable because the faux monies do not represent actual resources.

You call it baloney because it make no sense to you. I accept that your preconception prevents you from entertaining any other conception.

You once said that you were not Marxist, but the Marxist roots of your dialog are apparent to me.

You do not come here to learn anything, you have not learned anything. Your belief is untouched and apparently untouchable.

You have lied abut wanting to learn anything here. You have rejected all arguments presented to you, no matter how extensively presented.

Repeated refutations of your straw men have had no effect.

You are closed.

Methinks May 21, 2009 at 12:37 pm

Idiot,

Nobody can shout you down. You're all mouth and no brain. You pick up your bullhorn and bleat your BS until everybody is ready to open a vein. I'm just saddened by the fact that you've reproduced.

Methinks May 21, 2009 at 12:38 pm

"You once said that you were not Marxist, but the Marxist roots of your dialog are apparent to me."

Yes, but he's so dumb they are not apparent to him. I honestly don't know if I've ever run across a dumber human being.

Previous post:

Next post: