Wednesday, October 15, 2008

Confidence In the System

This morning, on the Today Show, I watched the United States Treasury Secretary, Henry Paulson, laud the government bailout, stressing that it would help restore confidence in our capitalistic economic system. Yet all polls and the Dow show that, so far, this confidence has not been restored. I reiterate that the policy of forcing confidence via taxes is not only a poor policy, but an anti-capitalistic one.

The public has long since called "no joy" on our economic situation. This feeling began after 9/11/01 and never completely bounced back before the latest hefty downturn. President Bush's solution has consistently been to tell the American people to spend, and now to force them. But this "solution" does not really solve the problem; people are afraid of losing their livelihoods. Many Americans also do not trust the ethics of many of our financial institutions and corporations.

The ethical climate of our system has given us a reason for doubt. Situations like Enron, WorldCom and now the Petters Group Worldwide scandals certainly only confirm that doubt. The viable solution is not to throw money at the problem, but for reform within the financial and corporate institutions themselves. That reform should not come from our Government, but from the citizenry. People, you are not helpless. When you do not like how a company you have depended on is treating its clients/customers/employees, find someone else. You may have seen recent commercials that have yelled, "Fire your bank!"

Capitalism only works when people decide on what they want and pursue it together. If people flock away from certain products or services, the answer is either to change the products and services or to find ways to make them cheaper, not force people to use them. If a company does not make ethical decisions, it is up to the public (and if necessary the judiciary) to solve it, not the federal government. The old proverb says, "One bad apple spoils the bunch," and the same is true concerning laws. If the government passes sweeping laws on ethics, corporate reform, and basic ways of how to conduct business, it limits business and harms the economy.

Our reform must not come from the government, just as the bailout should not have. Instead, our corporations and financial institutions should have been allowed to "sweat it out" until they figured out how to accommodate a scared populace. That necessarily means change, and those fumbling giants who cannot change founder. I generally agree that the scariest sentence is: "I'm from the government, and I'm here to help."

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