Money for Nothing; Your Bailout for Free
Get ready, the bailout train has left the station again, and should be arriving at its destination on or about January 21st. It promises to be a doozy, too—probably $300 billion or more.
Do we really need to put that much public money at risk—on top of what has already been committed? Don't CNBC and Fox Business tell us daily that there are trillions and trillions of private dollars sitting on the sidelines? Wouldn't it be smarter to find ways to pry that capital loose, rather than take it directly from government coffers? But how? Remember, greed works; it always has. It just needs to be more tantalizing than fear is paralyzing. Currently, fear is winning. Healthy greed is what drives people and institutions to take risk, and risk taking is the grease that keeps the engine of capitalism from shutting down.
So, why not incent those with capital such that the opportunity for attractive returns is so compelling that fear takes a back seat? Because, we appear to have entered a phase (and let's hope it's only a phase) where there is great disdain for those who reap rewards for their risk taking. For the Left, it has become an ideological third rail. It is understandable to some extent. We have just witnessed an unprecedented level of risk taking abuse, and concurrently, an unprecedented period of super-sized executive compensation. Nevertheless, we have to recognize that capitalism cannot thrive until we get back to the point where properly regulated risk taking is untethered. It's okay for the owners of capital to profit, because they might also take a loss. That's what risk is about. The system can't work, otherwise. Big profits are okay, too. They are what motivate similarly big and chancy investments.
Government money is best used when it doesn't make sense for the private sector to invest, such as on very early cycle research and development. This is not such an instance. Private money is chomping at the bit. The greed/fear calculus merely needs to be adjusted by smart government policy. Let's unleash the private sector to do what it does best. Don't foolishly and unnecessarily put public money in jeopardy. We can't afford bigger deficits and bigger government.
Do we really need to put that much public money at risk—on top of what has already been committed? Don't CNBC and Fox Business tell us daily that there are trillions and trillions of private dollars sitting on the sidelines? Wouldn't it be smarter to find ways to pry that capital loose, rather than take it directly from government coffers? But how? Remember, greed works; it always has. It just needs to be more tantalizing than fear is paralyzing. Currently, fear is winning. Healthy greed is what drives people and institutions to take risk, and risk taking is the grease that keeps the engine of capitalism from shutting down.
So, why not incent those with capital such that the opportunity for attractive returns is so compelling that fear takes a back seat? Because, we appear to have entered a phase (and let's hope it's only a phase) where there is great disdain for those who reap rewards for their risk taking. For the Left, it has become an ideological third rail. It is understandable to some extent. We have just witnessed an unprecedented level of risk taking abuse, and concurrently, an unprecedented period of super-sized executive compensation. Nevertheless, we have to recognize that capitalism cannot thrive until we get back to the point where properly regulated risk taking is untethered. It's okay for the owners of capital to profit, because they might also take a loss. That's what risk is about. The system can't work, otherwise. Big profits are okay, too. They are what motivate similarly big and chancy investments.
Government money is best used when it doesn't make sense for the private sector to invest, such as on very early cycle research and development. This is not such an instance. Private money is chomping at the bit. The greed/fear calculus merely needs to be adjusted by smart government policy. Let's unleash the private sector to do what it does best. Don't foolishly and unnecessarily put public money in jeopardy. We can't afford bigger deficits and bigger government.
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