Thursday, September 18, 2008

Bailouts are a part of the "ownership society"

Let’s face it; we live in the “ownership society.” The government has been telling people to “own” their future. That means owning your own home and perhaps other real estate, along with stocks, bonds and other financial assets. All of our policies—tax, regulatory, trade, monetary, income and wages—have been fashioned to encourage the participation in the ownership society. No…they have been DESIGNED to make us owners. So, what were we supposed to do? That’s why we all became owners or have strived to become owners. It’s also why people should not be surprised at government attempts to support the markets. Bailouts are a normal in a society where the government tells you to be an owner.

When I was a kid, if I got in trouble for something I shouldn’t have been doing, my parents would say to me, “Michael, you shouldn’t have been doing that.” I was left to suffer the consequences of my actions without any support—moral or otherwise. There was no fostering of any moral hazard in my family.

However, when my parents encouraged me to do things and I failed or got injured (yes, there was that broken ankle in the summer of ’74 racing Motocross, which my father said I should do) I was not scolded or left to stew in my own juices. I was cared for, supported, nurtured, and pretty much encouraged to go on.

That is why it is stupid to criticize bailouts. Bailouts go hand in hand with the ownership society in the following regard: If you tell people to buy stocks and real estate for their retirement and if you fashion tax codes, regulations, monetary and social policy and everything else for that to happen, but things turn sour, then don’t act surprised when people come asking for help!

It’s normal!

I’ll tell you what would be abnormal. It would be if you told everyone to “own” their future and they went out and did just that, but then things turned sour and you said, “You shouldn’t have done that!”

Is this the message we are sending? I am afraid that some people, but I won’t mention names (Conservatives) are saying just that.

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