Four On Capitalism, and Crony-Capitalism

Four good reads, all worthy of your time. And see this from yesterday.

Horwitz on the Financial Crisis and Recession: MacWilliams needs to ask himself why, if this was really capitalism, banks would make loans to people they thought could not pay them back. If corporations are greedy profit-seekers, why would they risk customers not being able to pay unless they believed that those mortgages could be sold off to government-sponsored enterprises like Fannie and Freddie who would, as they did, get bailed out by the government?

Occupy Wall Street and Washington’s History of Financial Bailouts: The economist Milton Friedman liked to point out that capitalism is a profit-and-loss system. Profits encourage risk-taking. Losses encourage prudence, which is just as important. Over the last 25 years, however, government policy has been laissez-faire when it comes to profits, and socialist when it comes to creditor losses. That is a very destructive cocktail. It has encouraged imprudent risk-taking financed with large amounts of borrowed money. When you subsidize recklessness, you unsurprisingly get a lot more of it.

Should Americans Support the Tea Party or Occupy Wall Street?: Cronyism is on the rise and getting worse. Obama’s Solyndra scandal is just the tip of the iceberg. Both Democrats and Republicans are raking in the money from the financial firms; as the Washington Post just noted, “Obama has brought in more money from employees of banks, hedge funds and other financial service companies than all of the GOP candidates combined.” When you’re in power, everyone wants to be your friend.

Math vs. Myth – Michael Tanner – National Review Online: “It is a medical truism that if you get the diagnosis wrong, the treatment will be wrong. The same holds true with Washington budgeting. Unfortunately, as we prepare for yet more debates over budgeting, spending, and stimulus, we can expect to once again enter a fact-free debate. Among the most common myths”… “

Additional links:
Wall Street Protesters Half Right?
Rhetoric, Reality, and the Recession