Monday, September 14, 2009

Statism Update

Despite having done little asserting of state power to reform the behavior of bank holding companies in a way that would make the "system" stabler, the Administration moves more deeply to involve the state in the economy in other ways. From the New York Times in U.S. Is Finding Its Role in Business Hard to Unwind :

When President Obama travels to Wall Street on Monday to speak from Federal Hall, where the founders once argued bitterly over how much the government should control the national economy, he is likely to cast himself as a “reluctant shareholder” in America’s biggest industries and financial institutions.

But one year after the collapse of Lehman Brothers set off a series of federal interventions, the government is the nation’s biggest lender, insurer, automaker and guarantor against risk for investors large and small.

Between financial rescue missions and the economic stimulus program, government spending accounts for a bigger share of the nation’s economy — 26 percent — than at any time since World War II. The government is financing 9 out of 10 new mortgages in the United States. If you buy a car from General Motors, you are buying from a company that is 60 percent owned by the government.

If you take out a car loan or run up your credit card, the chances are good that the government is financing both your debt and that of your bank.

Government at all levels already controls a very large share of medical expenditures, even before Washington acts on health care. Add in military spending, education, transfer payments, and it becomes harder to see what is left of private enterprise. Restaurants, computers and television, toothpaste?

The U. S. has joined much of Europe in practicing a large and growing mix of corporatism and socialism: statism.

All financed with an ever-growing ratio of debt to real economic output.

Regardless of what one thinks of the prior points, I think that most people agree that the debt aspect is troublesome.

The Governmental solutions in the U. S. and the U. K. are not encouraging in that regard.

Copyright (C) Long Lake LLC 2009

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