Personal Finance Blog by Debit versus Credit

What Happened To Free Enterprise?

July 30, 2008 | Filed in: Miscellaneous | 2 comments

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Free Enterprise: an economic system in which private business operates in competition and largely free of state control.

What happened to the days when Free Enterprise reigned supreme and it was bad news when a government stepped in to take control?  Our nation is quickly becoming a “bailout nation.”  While many will argue that it is for the greater good that our government bail out companies such as Bear Stearns, Fannie Mae and Freddie Mac, they may ask themselves yet, where do we draw the line?  By bailing out failing financial companies are we sending the wrong message to business and also taxpayers?  I think we are.  I think that we’re essentially telling companies that if they’re large enough - important enough - that we will bail them out if they make mistakes and are in risk of going under.  After all if we’re willing to bail out Bear Stearns then why not anyone else with enough clout?

It Hurts The Taxpayer

As if it wasn’t bad enough that we’re sending the wrong message to big business it becomes worse when one stops to think about where the money to bail these companies out is coming from.  Last I checked our nation is running a huge deficit.  Impossibly huge, one might say.  The money sure isn’t coming from the U.S. savings account, because we don’t have one.  It’s coming from your pocket.  It’s coming from my pocket.  Maybe not directly, but you can be sure that this will affect us in the future.  The Fed’s magic money making machine of course will be what creates the money to bail these companies out.  They create money out of thin air, to use at their whim.  This of course is what’s providing us with the highest inflation rates in some time.  Of course that’s another day and another topic.  To stay on point essentially what will happen is that the fed will bail out these companies, creating an even larger budget deficit this year which will one day need to be payed off by us.  The taxpayer.

A Slippery Slope

It’s a slippery slope that we’re on right now.  Where should the line be drawn?  Is it better to bailout large financial firms in danger of failing and save ourselves from an even longer and more drawn out recession that will create financial difficulties in the future or is it better to let Free Enterprise reign and whatever happens, happens?  I prefer Free Enterprise.  We’re not a great nation because our history has been filled with bailout after bailout after bailout.  We’re a great nation because of our belief in Capitalism and Free Enterprise.  The further we move away from this, the greater danger we place ourselves in.  Stay on a slippery slope for too long and you’re bound to eventually slip and fall.  I hope to God that we don’t fall.

Tags: Bailout Nation, Free Enterprise