Government Bailouts

[trombonesteak]

So this is a rather dated topic, I'm really just curious to see what other people who are inspired by Rand's ideas think of it.

For quite some time I was a major socialist. Then I got a really good teacher who convinced me (without ever mentioning Rand) of the morality of Capitalism. Then I read Atlas Shrugged. 'Tis quite a large read, and after 1100 pages of all CAPITALISM CAPITALISM CAPITALISM and a one dimensional display of socialism, I required a detox. So I chose Michael Moore's "Capitalism: A Love Story."

I disliked how he used the word Capitalism, of course, as after reading Rand I felt he had a faulty view. But his points on the government bailouts of Goldman Sachs and the automotive industry were quite poignant to me.

Then of course the Occupy movement came about, and I was disappointed to see how largely the events were/are unclear of their overall message, thinking "the 99%" was really more like a 7% of loser-looters. But a few people brought up great points about the gross nature of most of the financial/insurance companies (essentially the points Moore makes in his film, without the contradictions.)

What made Rand's philosophy so impressive to me was the idea of the power of the mind. The achievements of Galt and Rearden would be ridiculously great achievements in engineering, if they were real. Midas Mulligan the banker, to me seems great because he recognizes competence and invests in it. He is not into tricking people out of their mortgages to make as much money as possible.

I do not claim to be an expert on the subject: whenever I ask questions, I do so at the risk of sounding unintelligent, but with the hope of being more knowledgeable after the answer period.

But where is the morality behind a government bailout? The motor companies failed: they should be allowed to fail.

OR

Taking a socialist perspective that can value the idea of bailing out a car company (i.e. the factory workers will loose their jobs) where is the morality of the CEOs ending up with a bunch of cash?

Same thing goes with Goldman Sachs. Why did they need a bailout, if their system was so brilliant?

Finally, how, within the context of the aftermath of the mortgage crisis, are insurance companies/major financial institutions permitted to stay alive and functioning.

Rand makes me want to believe in the incredible power/moral alue of money. But the actions of most individuals with the larger share of said money (I do not include a Bill Gates, Mark Zuckerberg or Steve Jobs type in this: they made/came up with excellent products that are worth the money they have) to me seem to greatly devalue money, and ultimately saving the banks/car companies with loans, to me, seems to destroy the moral basis of capitalism these institutions claim to be the spokesmen/posterchild for.

Really just what thoughts.

To answer a question that may be asked: why so late/out of context (if it is out of context): I only heard about this forum today. The question/opinion has been on my mind for several months.

Thanks.

[Dante]

You're absolutely right about allowing them to fail, and Objectivists and free market economists in general have opposed the bailouts on precisely the moral grounds you seem to be indicating here. If you search this forum a bit you'll find quite a lot of criticism of the bailouts at the time, and many people who also agree with you about the Occupy movement having select good points when they criticize corporations being in bed with government. The problem there, of course, is that more government isn't the solution, nor is blaming the wealthy qua wealthy.

[Hairnet]

Capitalism depends on law that protects the lives and rights of every individual in our country. There isn't a government on earth that does this as well as it could.

The United States protects some rights a lot of the time, and we are successful as a society to the degree that we do this.

Take into consideration the current state of eastern europe, a region that supposedly rid itself of communism. Thats fine, but like many places that did this it does not mean that it gained a capitalist system. The Russian state for instance is notorious (I read an article about it in my Sociology of Law textbook) for not being able to enforce contracts, take on organized crime, or terrorism. All their current legal system revolves around enforcing political dominance, just like it did under the soviety union.

Contrary to the popular understanding ammong conservatives and libertarians, Capitalism is an action taken by the government, and if the government isn't protecting rights and enforcing contracts, there isn't capitalism.

[Steve D'Ippolito]

What we have today is what one might call "crony capitalism" where large companies jockey for government favors to get money, lucrative contracts, or directly smack down their competitors (including smaller innovative companies) via regulation--they can afford to comply but the smaller companies cannot. Smaller companies in turn join forces with anti "big" demagogues to pass other regulations. Even companies that _want_ to compete and do business without government "help" have to spend their time in defensive lobbying (please DON'T pass that rule, government!) and may even end up seeking favors because failing to do so puts them at a huge disadvantage.

To put it in bumper sticker form,

Both Objectivists and Occupiers see problems with this arrangement, but their diagnosis differs. Objectivists want to remove the "crony" from "crony capitalism" while the Occupiers want to remove the "capitalism".

[Spiral Architect]

I do not claim to be an expert on the subject: whenever I ask questions, I do so at the risk of sounding unintelligent, but with the hope of being more knowledgeable after the answer period.

Since the others have done a good job answering the core point I'll just help you with this. Don't worry about it. I've been reading back threads and their is a LOT of great feedback here. I've been reading Oist material for 20 years and I still don't have a comprehensive understanding of everything (a tought one for me is the finer details of Epistemology). It takes time and like you I've read a lot of sources over the years. The good news is that you don't have to reinvent the wheel as many posters here like to help explain things!

[Grames]

Both Objectivists and Occupiers see problems with this arrangement, but their diagnosis differs. Objectivists want to remove the "crony" from "crony capitalism" while the Occupiers want to remove the "capitalism".

This is good. Further echoing this bumper sticker analysis ...

There have been commentators trying to draw parallels between the Tea Party antipathy to the bank bailouts and the Occupy movement's antipathy to bank bailouts. The distinction to be made is that the Tea Party objects to the corruption of the bailouts while the Occupiers object to the idea of banks as inherently corrupt.

Edited January 11, 2012 by Grames