A few days ago, Kurt posted on this speech by Daniel Hannan. I agree that it’s brilliant, in how much it packs into a short space.
Kurt’s angle was, Who are our Hannans? But I would like to get into the substance of what Hannan said.
You may disagree, but I find that any of Hannan’s major points (summarized below) could be expanded into a worthy discussion.
- The 2008-9 bailouts, and the money-printing which continues today (another form of bailout), are an ethical crime. In effect, they transfer wealth from the poor and middle class to the largest banks.
- They are a breakdown of democracy: politicians serving themselves and the largest banks, rather than the People.
- Occupy Wall Street is directed at the wrong target. Occupy the national legislatures and central banks!
- Being pro-business (i.e., corporatist) is not being pro-market (i.e., capitalist). So, it’s not fair to say that we have been living through a failure of capitalism. Why is that?
- Subsidies, bailouts, and business nationalizations are the opposite of capitalism.
- Under capitalism, banks would have been allowed to fail. Bank shareholders, bondholders, and even some depositors would have lost money. But taxpayers and wage-earners would not have had to subsidize them.
- Capitalism achieves efficiency precisely when businesses fail (must be reorganized or sold). Business failures are not a sign of capitalism failing; they are a sign of capitalism working.
- The 2008-9 crisis was not caused by inadequate regulation. Why is that?
- No industry, except maybe nuclear power, is more regulated than the financial industry.
- Regulation imposes heavy ‘compliance’ costs on businesses, sooner or later. Those costs effectively protect the largest players (who can afford them), driving out newer and smaller players (who can’t).
- Thus, it was financial regulation precisely which created the “Too Big To Fail” (TBTF) banks; banks so large that their failure panics everybody into doing those bailouts.
- We should aim for a system where bank failure is normal and easy, as is bank creation (new, small and unconventional players).
- As for the alleged ‘greed’ of capitalism:
- The desire for material goods and higher living standards is universal in all human beings and all economic systems.
- Capitalism harnesses that desire uniquely for social good. Under capitalism, you ‘fulfill your greed’ by providing others with a service that they value.
- Whereas, under all of the other systems, you ‘fulfill your greed’ “not by being productive to your neighbors, but by crawling to those who are in a position of power.”
I wish Romney and Ryan had given speeches like Hannan’s! This is the kind of narrative – forcefully presented, anti-bailout, clear and true – that lovers of freedom must put before the American people.