The US Government would have us believe that those running the Federal Reserve, the US Treasury, and the regulatory agencies are absolutely the smartest people on the planet. They alone are able to see the future, and to prevent any and all bad things from happening, if only we give them enough money and enough power.
This article has reminded me that this idea is both widespread and absurd.
F. A. Hayek called it the fatal conceit, that of the official who thinks that he can know more, and do better than those who own, run, and are directly responsible for their own affairs.
In fact, it is silly to think that the U.S. President, or anyone in his administration is better equipped to run GM or Chrysler than the management team that currently runs them. Would GM's board of directors seek Mr. Obama's advice on who to hire for CEO in normal times? Would GM willingly seek advice from any political official? No. A large automobile manufacturer is a complex and delicate organization, and good management takes deep knowledge, expertise, and experience in the industry. Very few meet the qualifications to take on such a job.
If the GM board, or management were to take the advice of someone like Mr. Geitner on any major issue (absent some legal requirement), the stockholders would be outraged at such bad judgement. By the same logic, we, the taxpayers should be outraged that our politicians want to take over GM and Chrysler. Conceit is a good word for it, and that about sums it up.
It is equally false that our government is in a better position to run the nation's banks. At minimum, political ownership would inject more politics into banking decisions, and if you think this will lead to better financial health for the banks, I have a bridge to sell you.
I find it particularly ironic when Mr. Geitner presses the banks for more transparency. This from the man who won't tell the taxpayers exactly where the TARP money has gone, or how future money will be spent.
If Mr. Geitner worked for a private corporation, and he refused to tell the stockholders and/or board what he did with stockholder money, he would be fired, and possibly put in jail. Instead, he is getting a sympathetic ear from Congress to give him more authority to seize, fund, or reorganize more sectors of US Industry.
More government action, regulation and interference will not make anything better, but merely waste taxpayer dollars in a vain attempt to support the status quo. Authority already granted should be revoked, and the TARP money should be repaid.
The free market economy works. Let's stop trying to "fix" it.