Topic: Tyranny
Why I don't want President Obama to Fail The Costly Negative Externality of a Great Depressionby Jeff Peters
(conservative)
Wednesday, March 25, 2009
God knows that when people lose something, it drives them crazy. In matter of fact, we don't need God to tell us that because we feel it and experience it all the time. The feeling of achieving something is almost never as large as the pain from losing that very thing; especially if the loss is too costly to live in the same comfort.
This fundamental human concept reaches deep into politics and the direction of society. One can directly attribute the waves of rampant regulation after every financial crisis to the populist desire for government to return to the people what they lost. Far too many problems arise from government bailing out those who failed, but the very existence of popular support of these ideas incentivizes politicians to reap the opportunity for a vote.
This leads me to say that the issue for me is not necessarily government regulation but a market failure that can drastically change a society and the world forever. One of the most important examples is the rise of Nazi Germany after world markets failed in 1929.
No moderate German politician during the Weimar Republic ever saw a fringe party as the National Socialist German Worker's Party rise to extravagant powers. Following the First Great War, the world experienced an economic boom that aided Germany's failing economic situation. Not only did Germany's enemies destroy a sizeable portion of German wealth, but it further accosted the German economy by imposing an additional hefty burden, the Treaty of Versailles. Regardless, the German economy improved with the boom of the 20's bringing back wealth, work and happiness to the many who suffered for almost a decade.
Unfortunately, in a stochastic world when markets can fail at any time and expectations can diminish, the happily lived era of the booms ended up in a disaster for the German economy, returning millions to poverty, all in a matter of months. The Treaty of Versailles and its transfer of German production to its enemies returned as a huge problem, as the economy couldn't even support its own people.
The NAZI party was no new thing to Germany as Adolf Hitler and several of his associates worked day and night since the end of WW1 to popularize their fringe organization. However, it took the beginnings of a world-wide Great Depression to bring Hitler's National Socialism to the forefront of German politics and power. With his gift for communicating through strong and powerful words, combined with the organizing capabilities of the likes of Ernst Rohm, and an additional benefit of an economic disastor, helped grow the NAZI party from a small force of 800,000 to an unexpected and serious political storm of 6.5 million - enough to have political bargaining influence in Germany's representative body - the Reichstag.
As said before, every nation needs someone to punish for a disaster. The desires of the German people were no different. Hitler spoke of punishing those who surrendered to the enemy at the end of WW1, completely ignoring the demands of the Treaty of Versailles, removing the "powerful" Jewish population, and reviving the historically acclaimed image of the German. Hitler offered change, hope and punishment to those he and his constituents saw as the culprits for economic and social decline.
However, one can not say that Hitler's political opponents weren't willing to point fingers, but Hitler maintained the loudest and most enthusiastic voice. His messaged reached far and wide springing up support even in the greater German community, such as Austria and the Sudetenland in Czechoslovakia.
It is Hitler's sort of populism and extremism that is born from economic disasters. What is very important to note is that he knew he needed an event as grave as the crash of 1929 to increase the popularity of NAZI ideology. The financial crisis was so grave it achieved for the NAZI's a boom in political influence while Germans everywhere fell to poverty and hunger.
The recent cries about the rise of populism should remind the world of the fatal rise of NAZI Germany. Although one can't necessarily compare the US to Germany, as Germany suffered the hefty burden of a costly treaty coupled with a Depression, it shows that a populace can succumb to extremism in times despair, especially when everyday hardworking individuals expect to lose much more.
The honest truth is that it is extremely difficult to not want to do anything when what is at stake is more than a rescue package of 700 billion dollars. American life, happiness, comfort, and the pinnacle of the free world are at stake every single time a severe economic collapse occurs - because the negative externalities have a network effect on the country as a whole and around the world in the form of extremism.
Think again of the consequences of a NAZI Germany with aims to conquer the world and reshape it in its laughable image. Hitler and his culprits with such evil ingenuity conquered most of Europe, the Middle East, and Africa in a matter of several years. Germany's expansion and aggression was by far the costliest negative externality to the world. If the Great Depression were properly solved by US, would the incentive for extremism have existed in Germany?
This is not to imply that every negative externality requires government assistance for recovery as in several cases of markets failures, but a country should assess what is and is not capable of rebounding on it's own. Team Obama's ultimate responsibility is to distinguish between which would require Government assistance and whether or not the US's current situation falls into that realm.
This leads into a more general point. Obama must succeed because his failure, which is what Rush Limbaugh hopes for, will have far greater consequences for us and the world.
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Very will put, Chris! The same can be said for those calling for the demise and destruction of the federal reserve driven economic system. While the system itself is corrupt, the alternative [utter chaos] would cause damage and harm beyond imagination, again opening the window for extremism. We can best hope and work for reform.
"The honest truth is that it is extremely difficult to not want to do anything when what is at stake is more than a rescue package of 700 billion dollars. American life, happiness, comfort, and the pinnacle of the free world are at stake every single time a severe economic collapse occurs - because the negative externalities have a network effect on the country as a whole and around the world in the form of extremism."
Why is it so difficult to actually believe in capitalism? There must be destruction of sections of the economy for capitalism to move forward. It does not work otherwise.
It is the very effort that tries to stave off economic contractions that have prolonged the pain and suffering for all. Had the auto industry not received any bailouts, we would be well on our way to better and stronger industries. Instead we now have the US government terminating CEO's.
Oh yes, and now guaranteeing the warranties! Welcome to New America.
Posted By: Christopher Espinal
Date: 2009-03-30 13:14:33
EJ. I agree but that quote wasn't necessarily a rational justification for bad policy. What that quote aims to show is that is that its very difficult to remove the emotional element from political decisions. However rational it may be to let big companies fail, there are bundled costs to that - such as even greater regulations.
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