You’re incompetent to run your own life, but competent to run the lives of others – that you’re unfit to exist in freedom, but fit to become an omnipotent ruler – that you’re unable to earn your living by use of your own intelligence, but able to judge politicians and to vote them into jobs of total power over arts you have never seen, over sciences you have never studied, over achievements of which you have no knowledge, over the gigantic industries where you, by your own definition of your capacity, would be unable successfully to fill the job of assistant greaser. - Galt in Ayn Rand’s Atlas Shrugged
“We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong … somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises … I say after eight years of this Administration we have just as much unemployment as when we started … And an enormous debt to boot!” - Treasury Secretary, Henry Morganthau, 1939
Eight years of FDR didn’t work. What makes people think that eight years of Obama, who’s proposing the New New Deal, will fare any better? Back then we still had gold to fall back on. Since the Nixon Shock of the 70s and subsequent Bretton Woods II agreement, that safety net has been gone.
No investment bank owned by its employees would have levered itself 35 to 1 or bought and held $50 billion in mezzanine C.D.O.’s. I doubt any partnership would have sought to game the rating agencies or leap into bed with loan sharks or even allow mezzanine C.D.O.’s to be sold to its customers. The hoped-for short-term gain would not have justified the long-term hit.
No partnership, for that matter, would have hired me or anyone remotely like me. Was there ever any correlation between the ability to get in and out of Princeton and a talent for taking financial risk?
Now I asked Gutfreund about his biggest decision. “Yes,” he said. “They—the heads of the other Wall Street firms—all said what an awful thing it was to go public and how could you do such a thing. But when the temptation arose, they all gave in to it.” He agreed that the main effect of turning a partnership into a corporation was to transfer the financial risk to the shareholders. “When things go wrong, it’s their problem,” he said—and obviously not theirs alone. When a Wall Street investment bank screwed up badly enough, its risks became the problem of the U.S. government. “It’s laissez-faire until you get in deep shit,” he said, with a half chuckle. He was out of the game.
It was now all someone else’s fault.
Obviously there is more to the history of our banking system that has played into this current situation, but Lewis mainly covers the unfolding disaster from the end of the S&L crash of the ’80s till the present. It’s a bit lengthy, but well worth the time.
Ask yourself, what would the founding fathers, or even the pre-WWII citizens of 1940 have thought about the tyranny of the modern day IRS compared to oh so unfair taxation and tariffs of King George across the pond? I guarantee you, they’d be thinking REVOLUTION. King George the III had nothing on New Deal Democrats. The crown didn’t even have an income tax in 1776. The income tax was 1% on the income of the richest 3% of voters in 1913, when it became Constitutional for the first time (and with that 1% on the top 3% taxing all income over $1000, the US Federal government brought in more revenue in 1913 than 1787-1912 combined). People were terrified that it might someday be raised to 10%, and were laughed at for their paranoia. By the time FDR got around to implementing the New Deal after his threat of court packing shenanigans, he’d raised the highest income tax bracket to 79%. And lest you think this was a New Deal aberration, under the Truman administration it was 94%, and under Carter 70%. Thinking it had reached unimaginable heights, neoconservative Reagan (back when the term meant former Democrats) reduced it to 38.5%.The New Deal and the imperial presidency got so out of control that after his death, so repulsed was the legislature that the Democratic Congress passed an amendment with approval of 3/4ths several States, that no President should ever be in office for greater than two terms ever again.Do I think a New New Deal is potentially the worst thing that could happen to America the nation, and America the idea? You betcha. It slightly concerns me when supposedly formally trained instructors of Constitutional Law think FDR was the greatest thing since sliced bread, and worse yet, cite him as a shining example of how you’d run your Presidency. And if you think the Victory Tax was an intrusion? A certain Senator from Illinois wants the IRS to know your financial history in such specific detail, that he plans to have your tax forms pre-filled for you so you can file your taxes “in five minutes”. In Soviet America, taxes do you!
“If ye love wealth greater than liberty,
the tranquility of servitude greater than the animating contest for freedom,
go home from us in peace.
We seek not your counsel, nor your arms.
Crouch down and lick the hand that feeds you;
May your chains set lightly upon you,
and may posterity forget that ye were our countrymen.”
