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Tuesday, December 15, 2009

Obama: Patriarch of Banks

In the New York Times today, President Obama is reported as having said this to the big Wall Street Bankers in a conference call with them, “The way I see it, having recovered with the help of the American government and the American taxpayers, our banks now have a greater obligation to the goal of a wider recovery, a more stable system, and more broadly shared prosperity."

So what is shared prosperity?

When I think of "share," I think of a mother telling her children they must not hog all the cookies. Although it is a benevolent term, and we all think of sharing as important, it is a dictatorial term. Sharing because you want to is one thing; sharing because the government makes you, is another. But what I really don't understand is the President's notion, that he will persuade the bankers to think of their banks as extensions of government benevolence.

They say that Wall Street bankers are prosperous again, due to tax payer bailouts. And since we paid for it, we all deserve to benefit from their prosperity. But this outlook by the President, shows his foolishness. Here's a lesson for him:

Businesses don't exist for "shared prosperity." They exist to make money. By pursuing profits, they must provide a product or service to customers. In doing so, there is shared prosperity because every consumer benefits: competition drives down prices, increases quality. In a free market, no exchange takes place, unless both parties benefit. A free market is not about sacrificing of yourself for the good of mankind; but rather benefiting yourself, for the benefit of mankind.

This is all undermined when the business colludes with the government. Here, the business no longer seeks to please the customer, but rather politicians. Why lower prices or improve service when you are truly serving the government, not the consumer?

Currently, these banks are investing heavily in US Treasuries, and small business lending is way down. People are rightfully angry about this.

Mr. President, if you want "shared prosperity," don't talk down to them, like you are their parent, and you are going to teach them about their obligations and responsibilities to the public. They know their responsibilities, and they don't include managing the economy. Mr. President, that's your job! If you want them to serve the consumers of this country, and share their prosperity, then stop colluding with them! Let them fail. Take them off this socialism for the rich. Let them compete in the free market with the rest of us. Force them to turn to the consumer for profits, rather than the government.

"Shared properity" is not the product of government bailouts and paternal government urging, but rather, simply a free society; where businesses either serve the consumer or fail.

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