Matt Collins
10-20-2008, 10:40 PM
Three premiere libertarian resources -- the Cato Institute, the Mises Institute, and Reason magazine -- have collected the best of their writings on the subject of the bailout. We highly recommend these collections:
* THE CATO INSTITUTE's "Global Financial Crisis" audio, video and print
collection:
http://www.cato.org/special/financial_crisis/
* THE MISES INSTITUTE's "The Bailout Reader" collection:
http://mises.org/story/3128
* REASON MAGAZINE's "What caused the crisis" collection:
http://reason.com/blog/show/128985.html
Following are additional articles we've found helpful. Most are short, non-
technical, and from sources you know and respect.
As always, the Advocates' primary focus is libertarian communication. We hope this information will help you explain to your friends, neighbors, and opinion leaders that the crisis wasn't caused by the free market and that there are sensible alternatives to the Big Government proposals we're being bombarded with.
Remember, with crisis comes opportunity. Millions of Americans are outraged by the bailout. Many are making their voices heard. They are looking for answers and leadership. The fair-weather friends of the market are turning their backs on it. As a result, libertarians have the chance to make new allies and build our movement on this very issue during the coming months.
___________________
RON PAUL: Short Videos on the Economic Crisis
Ron Paul recorded a series of short videos on October 10th that offer analysis on the current financial problems.
Each is only a couple of minutes long. It's a great first stop.
Topics:
* On Restoring Confidence in the Markets
* On Market Intervention
* On the Possibility of the End of Capitalism
* On the "Safety Net" Concept
* On Capital and Capitalism
See them at:
http://www.campaignforliberty.com/
----------------------------------------------
Bingeing and Purging
by John Stossel, syndicated column, October 12, 2008
The bailout passed! Too bad.
When so many politicians speak with one voice in support of the biggest act of government intervention in the economy in generations, I cringe.
Everybody talked about the 'freeze' in the credit markets, but why, I wonder, were the cable news programs that repeated the credit-freeze mantra pausing for commercials from companies trying to lend me money? Ditech and LendingTree still hawk mortgages at under 6 percent. Some credit freeze.
http://www.ocregister.com/articles/credit-bailout-money-2191556-government-
politicians
----------------------------------------------
Don't Blame Capitalism by Peter Schiff
Washington Post, October 16, 2008
[Excellent short summary of the crisis and the false claim that the free market is to blame, by the economic adviser for Ron Paul's 2008 presidential campaign,]
Policies enacted by the Federal Reserve, the Federal Housing Administration, Fannie Mae and Freddie Mac (which were always government entities in disguise), and others created advantages for home-buying and selling and removed disincentives for lending and borrowing. The result was a credit and real estate bubble that could only grow -- until it could grow no more.
http://www.washingtonpost.com/wp-
dyn/content/article/2008/10/15/AR2008101503166.html
----------------------------------------------
Bailouts will lead to rough economic ride
by Ron Paul CNN Commentary: September 23, 2008
Highlights
* Too much government meddling in economy caused crisis
* The bailouts are another case of excessive intervention in economy
* The government isn't letting the market adjust prices to lower levels
* Bailout will only increase financial instability in the long run
The solution to the problem is to end government meddling in the market. Government intervention leads to distortions in the market, and government reacts to each distortion by enacting new laws and regulations, which create their own distortions, and so on ad infinitum.
It is time this process is put to an end. But the government cannot just sit back idly and let the bust occur. It must actively roll back stifling laws and regulations that allowed the boom to form in the first place.
http://www.cnn.com/2008/POLITICS/09/23/paul.bailout/index.html
----------------------------------------------
What Would Mises Do? Confessions of a free-market, anti-bailout operator
by Matt Kibbe, Reason magazine, October 2, 2008
It seems to me, during times of economic crisis, that there is an obligation to first do no harm. Should we rush to pass legislation written by tired, 25-year-old legislative staffers in the middle of the night in offices littered with
Domino's boxes and empty vente Starbucks cups? What are the inevitable unintended consequences? My biggest fear is that the plan will do far more harm than good, even in the short run, by propping up poorly performing banks at the expense of well-run institutions ready and able to come in and clean up the ess. And, yes, as Warren Buffet could tell you, they hope to make a healthy profit doing it.
We are talking about legislation that will fundamentally alter the face of American capitalism for at least a generation. Allowing investment banks to go to the government for a $700 billion line of credit is akin to inviting a vampire into the house. If you live, you certainly won't be the same person when you wake up the next morning.
http://reason.com/news/show/129218.html
----------------------------------------------
Henry Hazlitt on the Bailout
by Scott A. Kjar, Mises Institute, October 15, 2008
Treasury Secretary Henry Paulson needs to change his reading list. Instead of reading the balance sheets and income statements of the failing banking industry, he needs to read Henry Hazlitt's classic book Economics in One Lesson. It will cost Paulson far less than the $700 billion that he is spending on the bailout, and he might just learn a little economics in the process.
http://mises.org/story/3142
----------------------------------------------
Commentary: Bankruptcy, not bailout, is the right answer
by Jeffrey A. Miron, CNN September 29, 2008
Highlights:
* Government encouraged lenders to relax their standards
* Mortgages were given to people unqualified to repay them
* Rather than a bailout, government should let firms go bankrupt
* Talk of economic Armageddon is scare-mongering
Jeffrey A. Miron is senior lecturer in economics at Harvard University. A libertarian, he was one of 166 academic economists who signed a letter to congressional leaders last week opposing the government bailout plan.
http://www.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html?iref=mpstoryview
----------------------------------------------
The Free Market Didn't Fail
by Sharon Harris, the Liberator Online, October 4, 2008.
The questions we're all hearing right now go something like this:
"Isn't the current economic crisis a failure of the free market? Doesn't it show the need for additional regulation and government control?"
The answer: Not at all. The crisis has absolutely nothing to do with the free market. In fact, the opposite is true. This crisis was *created* by massive government regulation and government interference with the market. The government actually over-rode the market, and removed the protections the market normally provides.
http://www.theadvocates.org/liberator/vol-13-num-16.html#President
----------------------------------------------
An Open Letter to my Friends on the Left
by Steven Horwitz
Department of Economics. St. Lawrence University
September 28, 2008
Consider instead that the problems of this mess were caused by the very kinds of government regulation that you now propose.
Consider instead that effects of the profit motive that you decry depend upon the incentives that institutions, regulations, and policies create, which in this case led profit-seekers to do great damage.
Consider instead that the regulations that may have been the cause were supported by, as they have often been throughout US history, the very firms being regulated, mostly because they worked to said firms' benefit, even as
they screwed the rest of us.
Consider all of this as you ask for more of the same in the name of fixing the problem. And finally, consider why you would ever imagine that those with wealth and power wouldn't rig a new regulatory process in their favor.
http://myslu.stlawu.edu/~shorwitz/open_letter.htm
----------------------------------------------
How Government Stoked the Mania: Housing prices would never have risen so high without multiple Washington mistakes.
by Russell Roberts, Wall Street Journal, October 3, 2008
Many believe that wild greed and market failure led us into this sorry mess.
What's missing is the role politicians and policy makers played in creating artificially high housing prices, and artificially reducing the danger of extremely risky assets...
http://online.wsj.com/article/SB122298982558700341.html
----------------------------------------------
My Vote: NO
By **** Armey, National Review Online, September 29, 2008
The difficult question each member of Congress faces today is simply this: Do you believe that the political process, having produced many of the perverse incentives that resulted in our economy's current predicament, can solve these underlying distortions by essentially doing more of the same? I believe the answer to this question is unequivocally NO.
http://www.freedomworks.org/newsroom/media_template.php?issue_id=4100
----------------------------------------------
Bailout Brakes
by Matt Kibbe, Washington Times, October 1, 2008
"Well, if you're so opposed to a bailout of Wall Street, what would you do?"
I get this question all the time from advocates of the proposed $700 billion Wall Street bailout here inside the Beltway. ...
If I had any confidence in the ability of the political process to produce a rational, bold response, my answer would be: "I would do plenty." Start by unwinding the many government mistakes that created the housing bubble, repealing the various laws and regulations specifically designed to put people into homes that they could not afford. I would scrap the Community Reinvestment Act, break up Fannie and Freddie, and put the pieces back in the private sector. If "liquidity" and the availability of capital is the immediate problem, I would also repeal the tax on capital gains and other tax provisions
that punish savings and capital accumulation. The Flat Tax does all of this in one fell swoop. And, finally, I would repeal the various distortions in corporate accounting hurriedly drafted during previous legislative panics, starting with Sarbanes-Oxley.
An even bigger, but essential, legislative lift would take a serious look at the destructive role the Federal Reserve has played in this financial crisis. Rep. Ron Paul, Texas Republican, was arguing this before it was cool.
http://www.freedomworks.org/newsroom/media_template.php?issue_id=4101
----------------------------------------------
VIDEO: Austrian Economics and the Present Crisis
Peter J. Boettke, October 17, 2008
Future of Freedom Foundation
In this video distinguished Austrian free market economist Peter Boettke analyzes the current credit crisis from an Austrian perspective. It's part of a lecture series by our friends at the Future of Freedom Foundation.
Peter J. Boettke is the BB&T Professor for the Study of Capitalism, Mercatus Center at George Mason University, and University professor in the economics department at George Mason University. He is the author of several major books and is editor of the Review of Austrian Economics.
http://www.fff.org/comment/com0810j.asp
----------------------------------------------
An Echo, Not a Choice
by Sheldon Richman, Future of Freedom Foundation, October 17, 2008
[This is an excellent brief look at the politics of the bailout.]
Both major presidential candidates support the taxpayer bailout of Wall Street. They are just arguing over how to do it. ...
Free markets are free of more than regulation; they are also free of subsidies, privileges, and guarantees. Lightening up on regulation may please business, but if it is done while keeping the subsidies, privileges, and the guarantees in place, it is not a move toward the free market.
To see this point, imagine that you offer to cover someone's losses during a gambling junket to Las Vegas and as a measure of protection, you impose some restrictions on the size of the bets, the games played, and the total loss during an evening. If you were to remove those restrictions later while keeping the guarantee in place, we'd hardly describe it as a move toward self-responsibility. Quite the opposite, in fact.
This is analogous to what has happened in the American economy...
http://www.fff.org/comment/com0810i.asp
----------------------------------------------
At Moment of Truth, Where Was Dagny Taggart?
by Joseph L. Bast, President, Heartland Institute, October 2008
The front page of today's Wall Street Journal carries a story titled "At Moment of Truth, U.S. Forced Big Bankers to Blink." In the quarter-century I've been reading the Journal, I've never read a news story that was more disturbing. ...
A long train of government policy mistakes led to the financial crisis, but the capitulation by business leaders to the demands and claims of government officials has turned what could have been a contained and short-term economic problem into a genuine threat to the very survival of capitalism, and with it, of democracy.
http://www.heartland.org/article.html?articleid=23982
----------------------------------------------
* THE CATO INSTITUTE's "Global Financial Crisis" audio, video and print
collection:
http://www.cato.org/special/financial_crisis/
* THE MISES INSTITUTE's "The Bailout Reader" collection:
http://mises.org/story/3128
* REASON MAGAZINE's "What caused the crisis" collection:
http://reason.com/blog/show/128985.html
Following are additional articles we've found helpful. Most are short, non-
technical, and from sources you know and respect.
As always, the Advocates' primary focus is libertarian communication. We hope this information will help you explain to your friends, neighbors, and opinion leaders that the crisis wasn't caused by the free market and that there are sensible alternatives to the Big Government proposals we're being bombarded with.
Remember, with crisis comes opportunity. Millions of Americans are outraged by the bailout. Many are making their voices heard. They are looking for answers and leadership. The fair-weather friends of the market are turning their backs on it. As a result, libertarians have the chance to make new allies and build our movement on this very issue during the coming months.
___________________
RON PAUL: Short Videos on the Economic Crisis
Ron Paul recorded a series of short videos on October 10th that offer analysis on the current financial problems.
Each is only a couple of minutes long. It's a great first stop.
Topics:
* On Restoring Confidence in the Markets
* On Market Intervention
* On the Possibility of the End of Capitalism
* On the "Safety Net" Concept
* On Capital and Capitalism
See them at:
http://www.campaignforliberty.com/
----------------------------------------------
Bingeing and Purging
by John Stossel, syndicated column, October 12, 2008
The bailout passed! Too bad.
When so many politicians speak with one voice in support of the biggest act of government intervention in the economy in generations, I cringe.
Everybody talked about the 'freeze' in the credit markets, but why, I wonder, were the cable news programs that repeated the credit-freeze mantra pausing for commercials from companies trying to lend me money? Ditech and LendingTree still hawk mortgages at under 6 percent. Some credit freeze.
http://www.ocregister.com/articles/credit-bailout-money-2191556-government-
politicians
----------------------------------------------
Don't Blame Capitalism by Peter Schiff
Washington Post, October 16, 2008
[Excellent short summary of the crisis and the false claim that the free market is to blame, by the economic adviser for Ron Paul's 2008 presidential campaign,]
Policies enacted by the Federal Reserve, the Federal Housing Administration, Fannie Mae and Freddie Mac (which were always government entities in disguise), and others created advantages for home-buying and selling and removed disincentives for lending and borrowing. The result was a credit and real estate bubble that could only grow -- until it could grow no more.
http://www.washingtonpost.com/wp-
dyn/content/article/2008/10/15/AR2008101503166.html
----------------------------------------------
Bailouts will lead to rough economic ride
by Ron Paul CNN Commentary: September 23, 2008
Highlights
* Too much government meddling in economy caused crisis
* The bailouts are another case of excessive intervention in economy
* The government isn't letting the market adjust prices to lower levels
* Bailout will only increase financial instability in the long run
The solution to the problem is to end government meddling in the market. Government intervention leads to distortions in the market, and government reacts to each distortion by enacting new laws and regulations, which create their own distortions, and so on ad infinitum.
It is time this process is put to an end. But the government cannot just sit back idly and let the bust occur. It must actively roll back stifling laws and regulations that allowed the boom to form in the first place.
http://www.cnn.com/2008/POLITICS/09/23/paul.bailout/index.html
----------------------------------------------
What Would Mises Do? Confessions of a free-market, anti-bailout operator
by Matt Kibbe, Reason magazine, October 2, 2008
It seems to me, during times of economic crisis, that there is an obligation to first do no harm. Should we rush to pass legislation written by tired, 25-year-old legislative staffers in the middle of the night in offices littered with
Domino's boxes and empty vente Starbucks cups? What are the inevitable unintended consequences? My biggest fear is that the plan will do far more harm than good, even in the short run, by propping up poorly performing banks at the expense of well-run institutions ready and able to come in and clean up the ess. And, yes, as Warren Buffet could tell you, they hope to make a healthy profit doing it.
We are talking about legislation that will fundamentally alter the face of American capitalism for at least a generation. Allowing investment banks to go to the government for a $700 billion line of credit is akin to inviting a vampire into the house. If you live, you certainly won't be the same person when you wake up the next morning.
http://reason.com/news/show/129218.html
----------------------------------------------
Henry Hazlitt on the Bailout
by Scott A. Kjar, Mises Institute, October 15, 2008
Treasury Secretary Henry Paulson needs to change his reading list. Instead of reading the balance sheets and income statements of the failing banking industry, he needs to read Henry Hazlitt's classic book Economics in One Lesson. It will cost Paulson far less than the $700 billion that he is spending on the bailout, and he might just learn a little economics in the process.
http://mises.org/story/3142
----------------------------------------------
Commentary: Bankruptcy, not bailout, is the right answer
by Jeffrey A. Miron, CNN September 29, 2008
Highlights:
* Government encouraged lenders to relax their standards
* Mortgages were given to people unqualified to repay them
* Rather than a bailout, government should let firms go bankrupt
* Talk of economic Armageddon is scare-mongering
Jeffrey A. Miron is senior lecturer in economics at Harvard University. A libertarian, he was one of 166 academic economists who signed a letter to congressional leaders last week opposing the government bailout plan.
http://www.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html?iref=mpstoryview
----------------------------------------------
The Free Market Didn't Fail
by Sharon Harris, the Liberator Online, October 4, 2008.
The questions we're all hearing right now go something like this:
"Isn't the current economic crisis a failure of the free market? Doesn't it show the need for additional regulation and government control?"
The answer: Not at all. The crisis has absolutely nothing to do with the free market. In fact, the opposite is true. This crisis was *created* by massive government regulation and government interference with the market. The government actually over-rode the market, and removed the protections the market normally provides.
http://www.theadvocates.org/liberator/vol-13-num-16.html#President
----------------------------------------------
An Open Letter to my Friends on the Left
by Steven Horwitz
Department of Economics. St. Lawrence University
September 28, 2008
Consider instead that the problems of this mess were caused by the very kinds of government regulation that you now propose.
Consider instead that effects of the profit motive that you decry depend upon the incentives that institutions, regulations, and policies create, which in this case led profit-seekers to do great damage.
Consider instead that the regulations that may have been the cause were supported by, as they have often been throughout US history, the very firms being regulated, mostly because they worked to said firms' benefit, even as
they screwed the rest of us.
Consider all of this as you ask for more of the same in the name of fixing the problem. And finally, consider why you would ever imagine that those with wealth and power wouldn't rig a new regulatory process in their favor.
http://myslu.stlawu.edu/~shorwitz/open_letter.htm
----------------------------------------------
How Government Stoked the Mania: Housing prices would never have risen so high without multiple Washington mistakes.
by Russell Roberts, Wall Street Journal, October 3, 2008
Many believe that wild greed and market failure led us into this sorry mess.
What's missing is the role politicians and policy makers played in creating artificially high housing prices, and artificially reducing the danger of extremely risky assets...
http://online.wsj.com/article/SB122298982558700341.html
----------------------------------------------
My Vote: NO
By **** Armey, National Review Online, September 29, 2008
The difficult question each member of Congress faces today is simply this: Do you believe that the political process, having produced many of the perverse incentives that resulted in our economy's current predicament, can solve these underlying distortions by essentially doing more of the same? I believe the answer to this question is unequivocally NO.
http://www.freedomworks.org/newsroom/media_template.php?issue_id=4100
----------------------------------------------
Bailout Brakes
by Matt Kibbe, Washington Times, October 1, 2008
"Well, if you're so opposed to a bailout of Wall Street, what would you do?"
I get this question all the time from advocates of the proposed $700 billion Wall Street bailout here inside the Beltway. ...
If I had any confidence in the ability of the political process to produce a rational, bold response, my answer would be: "I would do plenty." Start by unwinding the many government mistakes that created the housing bubble, repealing the various laws and regulations specifically designed to put people into homes that they could not afford. I would scrap the Community Reinvestment Act, break up Fannie and Freddie, and put the pieces back in the private sector. If "liquidity" and the availability of capital is the immediate problem, I would also repeal the tax on capital gains and other tax provisions
that punish savings and capital accumulation. The Flat Tax does all of this in one fell swoop. And, finally, I would repeal the various distortions in corporate accounting hurriedly drafted during previous legislative panics, starting with Sarbanes-Oxley.
An even bigger, but essential, legislative lift would take a serious look at the destructive role the Federal Reserve has played in this financial crisis. Rep. Ron Paul, Texas Republican, was arguing this before it was cool.
http://www.freedomworks.org/newsroom/media_template.php?issue_id=4101
----------------------------------------------
VIDEO: Austrian Economics and the Present Crisis
Peter J. Boettke, October 17, 2008
Future of Freedom Foundation
In this video distinguished Austrian free market economist Peter Boettke analyzes the current credit crisis from an Austrian perspective. It's part of a lecture series by our friends at the Future of Freedom Foundation.
Peter J. Boettke is the BB&T Professor for the Study of Capitalism, Mercatus Center at George Mason University, and University professor in the economics department at George Mason University. He is the author of several major books and is editor of the Review of Austrian Economics.
http://www.fff.org/comment/com0810j.asp
----------------------------------------------
An Echo, Not a Choice
by Sheldon Richman, Future of Freedom Foundation, October 17, 2008
[This is an excellent brief look at the politics of the bailout.]
Both major presidential candidates support the taxpayer bailout of Wall Street. They are just arguing over how to do it. ...
Free markets are free of more than regulation; they are also free of subsidies, privileges, and guarantees. Lightening up on regulation may please business, but if it is done while keeping the subsidies, privileges, and the guarantees in place, it is not a move toward the free market.
To see this point, imagine that you offer to cover someone's losses during a gambling junket to Las Vegas and as a measure of protection, you impose some restrictions on the size of the bets, the games played, and the total loss during an evening. If you were to remove those restrictions later while keeping the guarantee in place, we'd hardly describe it as a move toward self-responsibility. Quite the opposite, in fact.
This is analogous to what has happened in the American economy...
http://www.fff.org/comment/com0810i.asp
----------------------------------------------
At Moment of Truth, Where Was Dagny Taggart?
by Joseph L. Bast, President, Heartland Institute, October 2008
The front page of today's Wall Street Journal carries a story titled "At Moment of Truth, U.S. Forced Big Bankers to Blink." In the quarter-century I've been reading the Journal, I've never read a news story that was more disturbing. ...
A long train of government policy mistakes led to the financial crisis, but the capitulation by business leaders to the demands and claims of government officials has turned what could have been a contained and short-term economic problem into a genuine threat to the very survival of capitalism, and with it, of democracy.
http://www.heartland.org/article.html?articleid=23982
----------------------------------------------