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Charles Darwin Discusses the Housing Bailout

Charles Darwin turned 200 years old on Feb. 12. Happy belated birthday.

I’m not going to touch his evolutionary theory in relation to biology and the origin of humans with a ten-foot pole – and I’m going to avoid cheap and gratuitous humor, like, “Charles you don’t need a match to light your birthday candles where he went,” or anything else juvenile.

No way am I getting anyone from any side of that debate mad at me. What I thought I’d do is get people mad at me for other things, like imagining what Darwin might have to say about Bailout Fever in Washington, D.C., applying aspects of his theory of evolution like natural selection, adaptability, and fitness.

Note: The views expressed may or may not be the views of the blogger in whole or in part. The character named Charles R. Darwin did in fact exist (Feb. 12, 1809 – April 19, 1882) but he probably did not state nor even think any of the following thoughts. This blogger is also not positing any theories of whether dead philosophers would agree to be interviewed. This is intended for entertainment only!

MG: Charles, what do you think of all the money the U.S. Government is spending to save companies and industries?

CD: They are simply rearranging chairs on the Titanic. The ship is sinking. And so will the whole fleet called Western Civilization if they keep pursuing such poppycock.

MG: Wow. How did you know that? The Titanic sunk in 1912 and you had already been dead almost 30 years.

CD: I have my sources.

MG: Like?

CD: Unnamed.

MG: I’ll leave it at that … but don’t you think it’s compassionate for a government to step in and relieve millions of people of the misery caused by such dramatic failures?

CD: Compassion? What does that have to do with survival? In fact, I’d say that rewarding weak and bumbling practices is the opposite of compassion. It hurts everybody.

MG: But it worked in the 1930s when FDR saved our nation from the Great Depression. Oh, I forgot you were already dead when that happened.

CD: I know the whole story.

MG: That’s right, you have sources.

CD: Exactly. In fact, I blame FDR and his adopted son LBJ for creating the conditions that will eventually lead the American economy into a death spiral.

MG: That’s rather dramatic. So are you saying that government assistance and intervention is always bad?

CD: First of all, I think government has an important role in economic evolution. I think Teddy Roosevelt got it right when he kept the Rockefellers from taking over the country and building an oligarchy that would have made Medieval feudal lords roll over in their graves with envy. You could argue that Teddy, not FDR, set the economy in motion. This opened up many more entrepreneurial opportunities. As a believer in letting natural selection take its course in a free market it doesn’t mean I don’t believe that there should be no accountability of corporations. For example, I believe they should pay for defrauding consumers. Nature has laws. Business should too. The business culture thrives when it adheres to good laws.

What FDR did may have helped America in the short term. But the course correction would have happened naturally, even if slower. And the companies that would have survived would have been much stronger for their resilience in face of adversity. But don’t be fooled. America is paying for FDR’s largesse with a populous that has screamed ever since, WHY AREN’T YOU SAVING ME? Maybe things are better for what he did and any argument about how history might have unfolded otherwise is pure speculation, either direction. I won’t say whether the payback is reasonable or not. But ask the Romans. Once the masses are promised that government will be the great problem solver, do they ever stop asking for their due? As a society you are constantly looking for money to fund the kinds of programs rolled out by FDR and accelerated by LBJ with his Great Society. Kennedy may have been from Boston but he would never put up with that kind of ethos. His dad taught him to exploit opportunities with the best of them. I digress. I’d just say again, the expectation and demand for more help, even after a crisis ends, never ends. People will ask for more and more government and more and more funding, which rewards ineptitude and punishes success. As glum as it looks in America right now, check out the economies of the more progressive social democracies. They won’t admit it but they would love to have your problems.

And ultimately natural selection finds a way anyway. When you crash and burn under the burden of compensating for a lack of fitness, you‘ll be singing a new tune, WHY COULDN’T YOU JUST LET US BE FREE?

MG: What about things like universal health care? Surely you can’t be so cold-hearted as to withhold that as a basic responsibility of the government?

CD: Again, I can’t think of a single country in the world that doesn’t envy your health care system. But I believe that when you move to socialized medicine America will absolutely love it. For a while. That is until services devolve and the governmental bureaucracy demonstrates it can no longer manage it. Then typical of America, you all will cry, UNFAIR!

MG: But it isn’t fair is it?

CD: Uh, who said anything about fair? I didn’t prescribe a theory of adaptation and fundamental fitness, I just described it. You all can do whatever you want.

MG: You seem awfully negative when it comes to government. Government gets a lot of things right.

CD: Sure they do. Other than eternal potholes around Chicago, Eisenhower’s interstate highway system was great. But when priorities and plans come from above, what happens to productivity? There ceases to be the kind of entrepreneurial spirit that feeds new design and development. There is no motivation to adapt to changing circumstances. So what you see is the eventual collapse of a healthy, breathing, growing economy. Capitalism does have to clean house in a big way every once and a while and incrementally on a daily basis, and yes people are hurt financially in the process. But you Americans worry too much about setbacks and love your histrionics. It sells newspapers! You take a snapshot and declare it is moving picture that will endure for 10 years! Almost as long as that Titanic film that came out a while back. I remember your end-of-the-world-as-we-know-it handwringing of 1987, which lasted about a month – and yes, I was already dead, but I do have my sources, so don’t ask how I remember. But in a fit and adaptable society, there are enough opportunities for people to get back on their feet. And don’t fool yourself. In a government-sponsored economic system, cataclysm comes as well. When the government can’t feed and clothe its wards the result is often violent and ugly in ways Americans can barely imagine.

MG: But owning a home has always been the American dream. Are you willing to kill that dream?

CD: You can manipulate the housing market with government rebates and incentives but it’s not going to solve the problem. Actually, if everyday Americans want to solve the housing crisis they can do so right now. Joe Homebuyer can go out and start a trend of buying and that will effect comparable sales and begin the process of price stabilization and even appreciation. But Americans aren’t doing that. Why? Not because of greed or corruption. It simply doesn’t make sense right now to buy. It’s not the investment it once was. The market was artificially inflated with government mandated lending policies and it’s still undergoing correction. Once it nears rock bottom people will buy again. Lenders will create new affordable lending practices to accommodate the demand. This will perpetuate appreciation. It will happen naturally. Just leave it alone.

MG: Where’s the compassion?

CD: Who said anything against a neighborliness that isn’t federally enacted?

Again, do what you want. Just make sure you have counted the cost of asking government to be the great financial problem solver. Does the make you more or less of a free nation? Does that fuel innovation and productivity or hinder it? Are you personally more responsible or less?

Having a government define and deliver what is good for the collective sounds compassionate and just might solve some short terms problems. But will government pull back from such a mandate? I’ve not seen such a tendency. One of my contemporaries, Karl, made a lot of utopian promises in an economic environment that was much more dire than it is today. Make sure the promises that have your heart thump thumping so excitedly today aren’t as empty!

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Big Government: Pendulum or Runaway Train?

Ever since FDR “saved” the economy – either through his welfare and public works programs if you like his fiscal model or by entering World War II if you believe the country was going to turn around on the basis of a business cycle anyway – despite his inept handling of the Depression – the size and role of the federal government in the business life of America has continued to grow.

Truman was too busy fighting wars and dealing with new international realities with our Soviet allies to leave a huge mark on America Inc., but conservative president, DDE, built the interstate highway system with a heavy dose of liberal spending, a symbolic and tangible symbol of a more federally driven America economy.

JFK we hardly knew you. We’ll never know his spending agenda based on his short tenure, though his activism in other areas might lead us to believe he would have been big government in all ways.

Inspired by political activists like author John Steinbeck – and in a well-documented strategy to secure minority votes, LBJ attempted to build a ‘Great Society’ – a phrase he borrowed from Steinbeck – to further expand the government’s role and responsibility as the provider and protector of the people’s welfare.

Let’s break from this historical free for all for just a second. Everyone, including politicians of all stripes, is concerned with the welfare of “the people” and individual persons. Whether one cares is not what is being debated, though in the political world it is posited by big government proponents that if you don’t want government to take responsibility for people’s welfare you don’t care about people’s welfare. The fiscal conservative or political libertarian will argue that he or she cares just as much about the welfare of individuals, he or she just does not think government does a very good job of supplying it. They want an old school model that limits the role of government to good laws and national defense – and leaves individual welfare up to individual effort, which will be much more productive and efficacious in a free enterprise system the thinking goes.

But what happens when that doesn’t work, big government proponents ask? Some free enterprise advocates agree with having clearly defined and limited temporary aid measures in place – others argue for the “family and friends” need to save you program. But based on what we’ve seen so far in our historical foray, there really haven’t been too may free enterprisers in control, no matter what we might assume from party affiliation.

RMN actually toyed with price controls, which would made him a hero among Marxist ideologues and an enigma to his independent, puritanical forebears, but ultimately, he poured his attention on foreign policy and then shifted his focus to another set of problems that were a little more personal in nature.

JC. We hardly knew you. Stagnation and malaise were the order of the day. The result of bad business or too much government intervention? Carter wasn’t sure there was a possible solution from the government or private sector and suspected we might be headed for leaner days. He spoke about those suspicions a little too forthrightly and the electorate lost as much confidence in JC as in the country’s future.

That ushered in the reign of RWR, who was sure it was the latter, too much government intervention, that was the problem. No one in the media and not even his vice president believed in his “voodoo” economics, but he get elected. He cut capital gains taxes, eliminated and simplified regulations to doing business, and cut income taxes for the middle and upper middle classes. (He would have done the same for the lower and wealthiest classes but it is impossible to cut anything from nothing.) It can be argued that he restored America’s business star, setting the stage for the largest capital growth campaign in history and the rise of Bill Gates. What he didn’t do, however, was cut government spending. And it wasn’t just because he built up the military. Liberals and columnists – I would have said Liberal columnists but why be redundant? – bemoaned all the benefits he cut from the poor. Not true. He did occasionally cut government program increases but never spending.

GHB (W’s dad). We hardly knew you, either. I do recall H was kinder and gentler than Reagan – at least he said he was – and raised taxes to prove it despite the protests of lip readers to the contrary.

WJC got his butt kicked on socialized medicine early in his first term. His solution? Keep Hillary away from Congressional hearings and enjoy Reagan’s promised ‘peace dividend.’ Then he started experiencing the joy of balancing the budget and reducing the federal deficit so much he went out and tweaked some welfare policies so that they became workfare policies. For the first time in 60 years people were involuntarily cut from welfare rolls. Bill might be the last and the only fiscal conservative of the past 100 years. Deep down, I suspect that still bothers him.

GWB. Or just W. A man of principle, faith, and profligate spending habits. He and the man who followed him, BHO, are architects and builders of an expanded role for government through TARP(s) that might have made FDR’s head spin. Even the German socialists are confused. When they throw money at economic problems it is at least to save unnecessary jobs. In America’s iteration of corporate welfare, it is to eliminate jobs and save companies.

The latest Obama move has been to appoint a ‘Special Master for Compensation’ to oversee executive and employee pay at companies that accepted government bailout money. Any wonder so many are fighting like crazy to give this ‘free’ money back? Any wonder Hugo Chavez, left-wing socialist president of Venezuela, claims he is more right wing than Obama?

So is the size and scope of the federal government cyclical – a pendulum that is simply on a high note of growth? Or is it a runaway train navigating hair-pin turns as adroitly as possible?

If these economic days are tough on your personal welfare and you see a bright shining light ahead, it might mean there is hope at the end of the tunnel for you. Or it might mean you better jump off the track in a hurry if you don’t want to get hit!