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While the
headlines of the day are filled with the story of Congress' rescue of Fannie
and Freddie (in a bill which seems to have been stuffed with more of what the
Americans call "pork" than a sausage factory), for this observer
the most exquisite testimony to the sorry depths to which the modern
interventionist government has fallen came in an op-ed for the New York
Times, penned by former Fed Vice-Chairman and all-round policy
"wonk," Alan Blinder.
Entitled,
"Cash for Clunkers" our learned friend there set out – with
what, to this reader, seemed to contain not the slightest, mitigating trace
of irony – a hare-brained scheme which promised to conflate the worst
elements of corporate welfare, crassly redistributionist politics, and the promotion
of one of those hot-button issues so beloved of our latter-day Guardians
– so-called "global warming."
The gist of this
truly Swiftian contrivance – for those not
given a hint by familiarity with the American vernacular – is for the
State to offer a premium to buy up the oldest, most clapped-out cars on the
roads (the "clunkers"), subject to some upper income limit on those
who own them (to ensure that only the deserving poor can benefit from this
injection of Other People's Money), and then to scrap every last rusting
jalopy this largesse brings in.
According to
Professor Blinder's own breathless characterization, such a tawdry piece of
populism would constitute "the best stimulus idea you've never heard
of" (sic) because it would "address today's concerns over stimulus,
inequality, and greenhouse gases, as well as an ageing vehicle fleet."
But why stop at
cars?
Can
"poor" people not be allowed to trade in their old sneakers, too,
so they don't embarrass themselves with their lack of fashionability
the next time they take the bus down to the strangely deserted shopping mall?
Is it any more
equitable that the man on less than the median income is expected to make do
with only a 32-inch-screen TV in each of his six bedrooms while he waits for
the foreclosure proceedings on his house to reach their tragic culmination?
Should the
beneficent Shepherd of the State not also protect the lower orders from the
social stigma and the crushing assault on self-esteem which arise from no
longer being able to tap a line of credit in order to buy the latest iPhone?
What the good
Professor Blinder is utterly able to recognize, of course, is that both Joe
Six-Pack and his supposed elders and betters in the ivy-clad halls of Princeton have got themselves into their current
parlous state by spending too much, not too little, in gratifying
their momentary whims. Handing them cheques and exhorting them to spend
again, is therefore not the remedy most likely to effect a lasting cure for
their affliction, though it may, of course, buy a few more X's for some
wannabe-Il Duce in the next political beauty
contest.
As one of the
more vocal apologists for the Federal Reserve, Prof. Blinder is also
precluded from the realization that this endemic imprudence has been
encouraged to reach such an Olympian scale only because of the long years an
interfering and intrusive political class has spent eroding individual thrift
and personal responsibility. Nor is he exactly the bookie's favourite to
confess that this has been worsened by the burden of having to grapple with
the false signals and perverse incentives given off by the inherently
unstable monetary system of state-sanctioned, fractional reserve banking from
which that same governing elite draws it sustenance.
As we have tried
to point out, on any number of occasions over the course of the last year,
none of what is taking place has to do with either a failure of (if you are
currently exulting from the Red end of the political spectrum), or a betrayal
of (if you are instead donning sackcloth and ashes from the Blue) anything
which remotely resembles "free market capitalism."
Inflationary
state corporatism is what has "failed" – or, rather, is what
has reached yet another, all-too-frequent low point – and the
legally-privileged nonsense of our monetary arrangements are what have, once
again, swept us all up to have our wealth consumed in the maw of their own
internal contradictions.
But, alas, such
protestations are wholly futile, for the Orwellian programming to which we
have long been subjected means that we no longer insist upon that proper
definition and rigorous use of words which are indispensable to clear
thinking.
Thus, we are
taught that a quasi-private mongrel of a mortgage company, spawned (along
with so much other persistent social evil) during the dark decade of the
1930s – an entity able to shower the riches of Croesus on members of an
executive board often unable to produce a viable set of accounts – a
set-up making its ostensible profits, not via a process of genuine
entrepreneurialism, but through the cynical moral arbitrage of pretending to
accomplish a warm-glow mission of "promoting the American Dream" at
its sponsoring politicians' vote-grubbing behest – this ill-bred chimera,
we are told, somehow epitomizes the "unacceptable face of
capitalism," red in tooth and claw!
As Gustav Stolper put it in his 1942 book, This Age of Fable:
"Hardly ever
do the advocates of free capitalism realize how utterly their ideal was
frustrated at the moment the state assumed control of the monetary system. A
"free" capitalism with government responsibility for money and
credit has lost its innocence. From that point on it is no longer a matter of
principle but one of expediency how far one wishes or permits governmental
interference to go. Money control is the supreme and most comprehensive of
all government controls short of expropriation."
We would all do
well to remember that, the next time we start blaming "capitalism"
for our woes.
Sean
Corrigan
Sean Corrigan
is Chief Investment Strategist at Diapason Commodities Management (Lausanne
and London)
Copyright © 2006 - Copyright © Diapason
Commodities Management - Sean Corrigan
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advice and is not designed to meet your personal financial situation. The
opinions expressed herein are those of the author
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outdated and there is no obligation to update any such information. The author, 24hGold, entities in which they have an
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