Thursday, November 13, 2008

Open letter to Congress about the bailouts

The Honorable Barbara A. Mikulski
Hart Senate Office Building Suite 503
Washington DC 20510-2002

The Honorable Benjamin L. Cardin
Hart Senate Office Building Suite 509
Washington DC 20510-2003

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No government money, whether borrowed or taxed, should ever be used to bailout private financial interests.

No government money, whether borrowed or taxed, should ever be used to bailout private companies of any kind, including the car companies.

What is socialism? It is the ownership by the government of companies and enterprises.

History should teach us that socialism is the most inefficient and ineffective political and economic structure.

In order for an economy to succeed, in order for a country to prosper, government needs to get out of the way and stop trying to manage things.

The government caused the Great Depression. Even Ben Bernanke, the Chairman of the Federal Reserve, agrees. Here's what he said at the celebration of Milton Friedman's 90th birthday in 2002 . ."I would like to say to Milton (Friedman) and Anna (Schwarz): Regarding the Great Depression. You're right, we did it."

Predictably, government schools don't teach this view. Instead, they teach that . . .

The depression became Great because President Hoover was an advocate of laissez-faire economics who did nothing to intervene. In fact, Hoover was the first president to ever make major interventions in the economy.

The economist Bryan Caplan lists 21 Hoover interventions.

Another economist, Murray Rothbard, has described how President Hoover was the true creator of the "New Deal" approach for which FDR later claimed dubious credit.

Caplan and Rothbard are not alone in this. Roosevelt aid Rexford Guy Tugwell was to say years later . . .

"We didn't admit it at the time, but practically the whole New Deal was extrapolated from programs that Hoover started." (Source: Paul Johnson, A History of the American People -- New York: HarperCollins Publishers, 1997, p.

Even FDR himself agreed that Hoover had intervened, he just disagreed with the interventions. During the 1932 presidential campaign Roosevelt repudiated Hoover's meddling, saying . . ."The doctrine of regulation and legislation by 'masterminds' ... has been too glaringly apparent at Washington during the ."

And during the 1932 presdiential campaign Roosevelt constantly criticized Hoover for his huge deficits, promising instead . . .

* "immediate and drastic reductions of all public expenditures"
* "abolishing useless commissions and offices, consolidating bureaus and eliminating extravagances"
* "reductions in bureaucracy"
* Implied tax cuts
* And a "sound currency to be maintained at all hazards."

We aren't taught that Roosevelt promised these things. Instead, we're taught that FDR's heroic interventions saved the free market from itself.

But what did his interventions actually achieve?

* The depression became Great under FDR's guidance.
* It lasted more than a decade.
* Prosperity never returned while he was President.
* The economy only recovered after Roosevelt was dead and buried

Even FDR's own economic team knew that his New Deal interventions had been a complete failure. Here's what FDR's Treasury Secretary, Henry Morganthau, admitted to Congress in May, 1939 . . .

"We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong ... somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises ... I say after eight years of this Administration we have just as much unemployment as when we started ... And an enormous debt to boot!" It's significant that Hoover and Roosevelt were the first to intervene in the economy. Previous downturns had always been allowed to run their course, lasting from a few months to a couple of years. But the first one the politicians tried to stop is the one that lasted more than a decade, and that really hit hard.

If government intervention worked, then why did the 1929 depression become Great, when none had before?

It ought to make you angry. The injustice is so clear. The politicians caused the problem, blamed it on the free market, and then benefited from the disaster they had created by grabbing vast amounts of power and money.

And now it's happening again. History, sadly, is rhyming.

We're being told that the economic downturn resulting from the housing bubble is a market failure, and that massive government intervention is needed in all directions. But the truth is this . . .

* Government housing policies and easy credit from the Federal Reserve caused the housing bubble.
* Companies and individuals who made bad decisions based on these policies should pay the full price for their mistakes
* None of them should be rescued
* The politicians should not intervene

In short, the politicians should stop pursuing policies that rhyme with those pursued during the Great Depression.

In addition, the advocates of Big Government should be asked . . .

* Why, precisely, was the first economic downturn in which the government intervened the only one that became so bad that it earned the name of the Great Depression?
* And why is it, precisely, that the major areas of American life where the government has intervened to make things more affordable -- such as health care, higher education, and housing -- are exactly those areas where costs have risen the most?

Government intervention does not work. It does not make things more affordable, it makes them more expensive. It does not prevent economic downturns, it causes them, and deepens them.

Please do no support or vote for any bailout of GM or any other private company.

We are already seeing the problems that the bailouts that have already been enacted are causing. Secretary Paulson is having to try to change original plans and bob and weave when things change. No government can react fast enough or smart enough to manage the economy well. Government needs to get out of the way and stay out of the way if this economy is ever going to recover and get back on track.

Thank you.

Mr. Brian Mason

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