| | Ed:
That was good stuff. You made a great point.
Hard to show, but easy to imagine: that flowdown from the Govt (using OPM from all) was a selective subsidy of just -some- companies and -some- banks. We subsidize the failing by effectively punishing success. Properly functioning banks wanted no part of TARP, but were forced to participate. Why? Because their ability to not depend on handouts would make the failing banks look bad(providing information to consumers...) And, the Gov't knew better.
Seriously.
Our Gov't has, for decades, been fatfingering the management of risk; by force, shedding risk from some onto others.
The others have noticed, and that carcass we see with the bones showing is those others taking a bye.
The Gov't takes breath(not only from still breathing beasts, but from future economies)and forces it into the carcass of our once beast. The beast's lungs expand, and indeed, it exhales. But the beast does not adequately breath on its own.
Spending is a downhill human effort, undertaken mostly with pleasure. (Spending others money even more so, or even, other generation's credit.) Earning is an uphill human effort.
The engines that drive economies as healthy beasts involve the willingness to make an effort take on risk and run uphill. Gov't policies have deliberately attacked the incentive system, replacing it with whips and guns and whimsical, arbitrary alternate flogging/prodding of 'the' economy. These people have lost their minds, are just flat out wrong, and can't believe it. Utopists have attempted to unilaterally repeal the management of risk in the universe by forcefully shedding it off of some onto others from on high.
The risk/reward model exposes 'too much' failure/success, and so, in their attempt to target stasis, they punish success and subsidize failure. This is a tribal race to the bottom.
Those 'purple people' working for wages are doing so on a risk free, guaranteed rate of return basis, and so, at a discounted basis, to reflect the value of the guarantee.
The CEOs, shareholders, equity holders are working on an at-risk basis, with no arbitrary limit on either upside or downside. To achieve a certain return, they must sharpen their pencils and employ risk free labor smartly.
As you well point out, along comes the Gov't -- to only some companies, to only some banks -- and props them up with OPM on a totally risk-free basis. Suddenly, those who once intelligently managed risk and lived under the rules of risk/reward have greatly reduced incentive to do so, based on how much rain is falling effortlessly from above. As well, their 'competitors', seeing a now rigged game(a necessity for the Outcome Based Justice folks), have reduced incentive to take on risk on that no longer even playing field, and so, even they contract...
... resulting in the current 'depressed' economies.
When you objectively examine these policies, it gets harder and harder to categorize them as simple disagreement on policy. It is getting next to impossible to conclude anything other than it is a deliberate scheme to ruin the nation, because that is exactly the result.
I forget if I ever showed this to you, but here is a YouTube http://www.youtube.com/watch?v=_KlNcf0xm3w model of the economies.
I wish I had included some kind of illustration that distinguished risk free vs. at-risk pulling on pump handles, but both clearly exist in our economies, and the risk-free pulls as wages ultimately depend on at-risk pulls EXCEPT where subsidized by taxation taken from others. By increasing the amount of Gov't management of risk, painlessly using OPM, we reduce the total amount of focused at risk management in our economies. The results are what they are.
I recognize that this model, as oversimpified as it is, is already way too complex to broadly make the point.
But, with this model, notice what happens when the gov't simply pours manufactured water into the pipes. Sure enough, water runs down hill. But where is the incentive to freshly pull on pump handles, especially, under a model of managed, focused risk?
The Gov't has been killing the engine that drives economies uphill and allows the beast to breath on its own. The Krugmans of the world believe that the beast can't help but breathe, no matter what flogging/prodding schemes they dream up with their whips and agendas. They are flat wrong, as is evident.
regards,
Fred
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