Bet you haven’t heard that term before.
Why does it seem to me that all Washington ever seems to talk about these days is bailouts? Bailout Freddie Mac. Bailout Fannie Mae. Bailout Wall Street. Bailout homeowners. Is it possible in America today that no one is allowed to fail?
You know, Phil Gramm was right. We are a nation of whiners. No one wants to believe that failure is an option anymore. Whatever happened to personal responsibility? Or learning from your mistakes? Or going through transformative difficulties that just might change your life and your behavior? But it seems like failure is off the board nowadays and that its governments job to rescue everybody.
Whatever happened to the philosophy of Friedrich Hayek, the great free-market economist and Nobel Prize winner, who said the great thing about capitalism is the freedom to succeed beyond your wildest dreams, but that there is also the freedom to fail? I believe Hayek once argued that if he had to choose between success and failure, failure is more important in terms of preserving the free-market system.
Of course, the great thing about America is that you can fail many times, pick yourself up, keep on trying, and then succeed beyond your wildest dreams. But this whole process is being subverted by the political attitude that no one must ever be allowed to fail. I dont like it. Its socialism, isnt it? Perhaps its big-government socialism. Or maybe its corporate socialism. Or maybe (with Fan and Fred) its Republican socialism.
No, I guess its really bipartisan socialism.
I’m with him. Failure’s a part of the process — for the free market and for all of us as individuals. We learn from setbacks, and so does private industry. Businesses like Radio Shack that were originally computer and electronic parts stores have now become places where you can buy cell phones and iPod accessories. They adapted and changed their product lineup to respond to the demands of the free market. When government interferes in this adjustment process by subsidizing or bailing out private industry, there’s less incentive to adjust and change what’s not working.
In the case of Fannie and Freddie, the government must step in here, because the results of letting it fail would be disastrous for the economy. But this is a bad precedent to set, and I hope that this is where the federal government finally draws the line.