The Government Economy

by Sal on April 2, 2009

in Economy,Politics

In less than a year, we as a nation have gone from a robust capitalist economic system  with some burdensome government regulation to be sure, to a government-controlled economy.  The federal government has effectively assumed control, by both legislation and executive order, of the financial and auto industries.  This week’s firing of General Motors CEO and replacing him with an Obama administration puppet was only the latest move in the direction of a government economy (the real CEO of GM is now Barack Obama;  he is in the process of deciding if GM should file for bankruptcy).

The government has also taken wholesale control of the financial sector, one of America’s largest industries.  When the bailouts were first enacted, they were described as temporary, emergency measures to save the free market.  Opponents warned that once Government had its tenticles in private enterprise, they would not release them willingly.  These predictions are now coming to fruition, with Congress seeking tighter control over the financial sector.  First, the “Pay for Performance Act of 2009,” now making its way through Congress, would give the Government the right to set salaries for all workers in any company that received TARP money.  Keep in mind, many banks were forced into taking TARP money.

Finally, the Obama administration is asking Congress to give the administration the power to sieze and nationalize any company that it deems in danger of failure whose collapse could damage the broader economy, whether they want to or not.  This is a very dangerous proposition.  Risk and potential for loss acts as a self-regulator for the free market.  With the idea that the Federal Government is going to bail you out and take you over if you fail, you are likely to take more risk.  This could end up leading the nation to an even deeper financial crisis years down the line as financial bubbles will have the tendency to get bigger with the threat of failure removed.

Welcome to our Government economy.  With Health Care Nationalization on the horizon, it is likely that over 50% of our nation’s GDP will soon be controlled by the hands of the Federal Government, a government that has never shown the competency to do anything well (other than in military matters).  The question remains, how can all of this be undone?  How will Conservatives address this mess when we inevitably regain control of Washington?

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