The Immorality of Bailouts, Redux

There are numerous practical arguments that bear against the wisdom of Feds injecting capital into banks, automakers, and a list about to become too long to maintain. But let's suppose for the sake of argument — contrary to sound economic theory and a century of history — that a race of alien geniuses could find a way to make it succeed.

Such efforts would still be grossly immoral.

It would still amount to taking money from some people to give to others. But let's ignore that. It still encourages irresponsibility, rewards failure, and disadvantages the prudent. But let even that pass. The worst is: it undermines freedom.

Every dollar spent by a Federal official — no matter the purpose or effect, no matter how desirable the goal or effective the outcome — is a dollar not spent by a private person. It violates his freedom to determine where his dollar will be spent. The money has to come from somewhere and, since the Feds have none, that somewhere is ultimately the forgotten man, the person who pays: you.

The Feds are spending money that the market — which, after all, is just an abstraction standing in for billions of transactions carried about by millions of individuals — has decided not to spend in that way. The intrusion invariably keeps private money, which does exist in large quantity, on the sidelines. (Nicole Gelinas discusses one such case in a brilliant article in City Journal.) But set aside that practical consideration for the moment. Think about what happens to the freedom of investors, bank customers, and others when the Feds take the lead.

By preempting those individuals, the Feds have taken on the role of parents of wayward children who misspent their money. Ultimately, they can only get away with it because too many of the citizenry have volunteered to be treated like kids.

People have accepted that status because for a century an increasing number of educators and editorialists have told them that freedom is impractical, even harmful. Left to our own devices, the Progressives have argued, the 'greedy' will game the system and we, helpless children that we are, must look to powerful parents to restrain them and fix what they break.

Those 'experts' have said that the amount and type of freedom, shrinking along both dimensions with every passing year, is best decided by politicians, molded by those same sources. They lied. But, choosing to believe these socially-anointed opinion-shapers, many have come to passively accept it as fact.

Still, whether freedom is taken away forcibly or given up voluntarily, the net result is the same: it disappears. Sooner or later, with enough of it gone, the trend will become irreversible — if the citizenry remain inert.

The right to freedom is rarely mentioned in editorials on the economy today. Apparently, the idea is passé. Or, at least, it's left on a neglected part of the bookshelf whenever there's a crisis. It has become a dispensable value whenever someone's pocketbook is temporarily threatened by fearsome shadows.

That's dangerous, because that is when freedom is needed most. That habit inevitably leads to a society in which public officials are no longer representatives but rulers. The citizen becomes a subject. The next, short step is to make him a slave.