In order to get people to believe the state is wise they were trying to make us believe the bailouts were a great idea because they would make the United States money. Guess what? They lied (shocking, I know):
US taxpayers are unlikely to get all their money back from a $700bn (£432bn) bailout of the country’s stricken banking and automotive sectors, according to a report.
The Office of the Special Inspector General for Tarp has published its latest report to Congress.
It said: “After three-and-a-half years, the Tarp continues to be an active and significant part of the Government’s response to the financial crisis.
“It is a widely held misconception that Tarp will make a profit. The most recent cost estimate for Tarp is a loss of $60bn. Taxpayers are still owed $118.5bn.”
This was the only possible outcome. In the business world failing is a sign that the business was not fulfilling the wants of enough individuals. When this happens there are only two options: change the business or face insolvency. At least in a free market those are the only two options, when the state gets involved there is the third option of receiving stolen money. That third option removes responsibilities from politically well-connected entities. They know failure isn’t a big deal because their friends in the political body will merely hand out some money and all will continue… for a while. Eventually the house of cards collapses as the number of bad decision makers increase and the state is no longer able to shovel enough money to keep their friends afloat.
When a company fails it’s time for it to go away. If it looks possible to turn around a failing business then investors will enter the game, if it doesn’t look possible then investors will stay out of the game. Investors, unlike the state, earn their money by giving capital to those who look like capable money makers so they’re more careful who they invest in. Sometimes they make bad investments and, like any other service provider, when they make too many bad decisions they have to exit the capital market when their money runs out.
It’s too bad the same conditions don’t apply to the state. If the state had to go away when it ran out of money we’d have rid ourselves of the federal government ages ago (and quite a few individual state governments as well).