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Thursday, March 12, 2009

"The Obama/Bush Philosophy vs. Free Society." the problem with centralized government

Pres. Obama campaigned hard on an anti-Bush platform. However, as a president, Obama continues to look more like President Bush everyday. Both seem to believe very strongly in a centralized "savior" government; one that creates a problem then saves you from it. But then again, so have many political leaders in the U.S.

Since Franklin Roosevelt was President, the U.S. has seriously wrestled with whether a free society is worth protecting and whether the Constitution should remain in full effect. Many people believe that individual people will not make good decisions on their own, and therefore the guiding hand of central government is needed. So there has been a movement to centralize industries such as banking, farming, education, the press, and countless others. In conjunction with this assault has been an outright assault on private property, contractual rights, and people’s pocket books – basically any kind of economic freedom.

There are pros and cons to such a centralized government. The pros are that the controlling institution is given the resources necessary to deal with practically any problem that arises. Without such resources, there supposedly would not be not power by which the U.S. government could fight a major war, or save victims of major natural disasters or salvage economic problems. The argument says that people would have to face such problems without a government-savior.

I would not agree with that contention, but, as I will address in this essay, the cons are impossible to ignore. Centralized planning makes human mistakes (such as real estate bubbles) magnified in size, scope and length. It puts a burden on the planners to figure out how to deal with millions of unique problems – the result of which are blanket policies which ill-serve any particular case. It puts a massive tax liability on every person who sits under the central planners, as they require more and more resources to deal with problems (in fact, the problem always seems to be that they just need more money!).

Worst of all, this centralized system takes away a person’s right to refuse to partake in the system. For example, if I oppose a war, or a financial bailout, I must still contribute to it whether I like it or not. A free society would stress giving people as much of a choice as possible. We have seen such a firm belief in centralized planning and many people have developed a visceral hatred for the idea of personal freedom. Freedom is said to be selfish and an impediment to “progress.” They even despise the idea that something like Social Security – a program supposedly designed to benefit the tax payer – should be voluntary.

Finally, centralized planning empowers a few people in a distant place, to make decisions for everyone else, which significantly reduces individual freedom. If the fruits of my labor are taken from me, I lose the freedom to use that money as I see fit. So as a result, my power to make such a decision is transfered to the government, which then decides for me who will be “bailed out.” They almost always choose those with political access -- firms like Citibank, General Motors or Fannie Mae. If people in this country really wanted to bailout these firms, than why don’t we make contributions to the bailout voluntary? Why cant people decide for themselves what is to be done?

The answer is clear and results from another major problem with central planning -- that it rewards those with access to the central planners. This leads to outright corruption. Since the U.S. centralized its banking system, a few firms are now “too big to fail.” Any "systematic risk" involved with the failure of these banks results from the centralization of them into an oligopily. But lets be honest, it has become clear that the bailouts are not based on so-called “systemic risk,” but rather political access. With half the money they spent, they could have bought every single mortgage outright. Plus, the government did not even use the bailout money for what it said it would. The firms are using the money to privatize profits but make risk public. Then the hypocrites in Congress, waste tax-payer money like crazy, then call meetings to lecture the very CEO’s they empowered.

We were taught by our founders that this is the very reason that our decentralized system of government was a matter of “common sense.” They understood that a people cannot be governed by afar, by elites who are far removed from individual problems. Governments always want to centralize the system because it gives them and their associates more power. Granted, it would give them the power to fix bigger problems -- but also the power to cause bigger problems as well.

So is it any surprise that when two quasi-governmental firms own the vast majority of American's mortgages, that we have a meltdown that is supposed to be paid for by our tax dollars? Is it any surprise that these companys are major donors to the politicians themselves? And then they want us to believe that our problems can be solved by those in Washington D.C., a notion that is laughable.

President Bush demonstrated a firm belief in centralized planning, although I question whether his motive was ideological or political. Some examples include: The No Child Left Behind Act, Medicare expansions, his housing bill and his $800 billion dollar "bailout package" (designed to correct the damage done partially by his housing bill).

Now President Obama is continuing this approach. He was the second highest recipient of donations from Fannie Mae and Freddie Mac, behind only Chris Dodd. He has sought, in his first month, to drastically expand the role of government in people's lives. He has already added massive liabilities to America's future earnings, manifesting a belief that the government knows better how to spend that money.

For this audacity, his legacy may be greatly harmed.

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