Memo: Let The Market Work

You hear the rumblings all across the country, that the government ought to bail out homeowners and or lenders. But any such government action would, by definition, be paid for by taxing other people. People who pay for their mortgages and rents on time, and people who have already paid for their homes and are not in debt up to their eyeballs. Such a bailout scheme would be completely unjust, un-American, and morally wrong.

Borrowers who are now in default, or will soon be in default, knew or should have known when they borrowed the money that there was a very real risk associated with that transaction – that they might not be able to repay and that there is a consequence to their actions. Lenders knew, or should have known, that making loans to people with little or no credit worthiness carried a similarly real risk, and that there is a very powerful consequence to such actions. In either case, those engaging in the transactions must be allowed the freedom and autonomy to face the consequences of their actions on their own. For if we allow a bailout of lenders and borrowers we set a precedent that will come back to haunt us 100-fold down the road.

When you or I engage in any endeavor it is the very real risk of loss, as well as the opportunity for gain, which motivates our actions. Humans need incentives by their very nature in order to thrive and to select among competing resources. If such incentives are removed, there is no way to measure risk and therefore no way to measure the value of any assets. Capitalism can do and has done many wonderful things, but it must be allowed to work in its full capacity otherwise there will be mis-investments and mal-investments which will not manifest fully for years to come. But manifest they will.

But there is another side to this issue as well, one must ask the question under what moral principle should responsible individuals be forced at the point of a gun to pay for the bad decisions of others who defaulted on their obligations and promises to repay? Whatever it is, its manifestation is the exact antithesis of a free society and a free country, and none of us can afford to allow such to become ingrained.

For your sake, for my sake, for the sake of whatever remnants of freedom that still exist in this country do not support a bailout of lenders or borrowers – let the market work.

Advertisements
Posted in Capitalism Advocacy, Taxes. Comments Off on Memo: Let The Market Work
%d bloggers like this: