The Business Of Government Isnt Business - Road to the Middle Class

Please. Government does everything badly, including making war and legislating. Yet helpless and abject failure doesn’t seem to matter too much when government keeps to war and law enforcement.

The last thing that anyone should think of is getting government involved in business.

But when Sen. Charles Schumer (D-NY) thinks that he can help out the banking regulators, or when political careerists think they can run GSEs like Fannie Mae and Freddie Mac, then even the man on the street can see that something ain’t right.

It seemed like a dandy idea to set up a government agency back in the Great Depression to create a secondary market in mortgages with the Federal National Mortgage Assocation. And then in 1968 it seemed like a great way of reducing the budget deficit to spin Fannie Mae off as a quasi-public agency and create Freddie Mac and Ginnie Mae as competitors.

But when the teetering mortgage giants need a bailout to prevent global financial meltdown, then something has gone wrong.

That something is the very idea that a government-sponsored enterprise can ever be run in a businesslike fashion where the risks are properly understood and managed.

Look at it this way. Two recent Fannie Mae notables were James Johnson, an aide to Democrat Walter Mondale and now a Washington power broker, and Jamie Gorelick, Deputy Attorney General in the Democratic Clinton administration and creator of the famous wall that hindered the intelligence agencies from connecting the dots before 9/11. What in tarnation do pols like that understand about finance?

Now take a look at the obituary of Dennis Weatherstone, former head of JP Morgan Chase. Weatherstone was the son of a clerk who never went to college but rose to sit in the chair of the greatest banker of all time, J.P. Morgan.

“If you can’t understand it, don’t do it,” was one of Weatherstone’s maxims. When Morgan’s bright young men invented new trading instruments and deal structures, they were allowed three short attempts to explain them to him; if they failed, their projects did not proceed.

Can you imagine Jim Johnson or Jamie Gorelick saying that to some brilliant young man at Fannie Mae? Why, you have staffers to do that sort of work.

Government has no business in business. It should stick to wars and moral equivalents of wars. They can even be fun—for the politicians. But business is grunt work. Why don’t you Olympian gods leave it to ordinary mortals?

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Christopher Chantrill blogs at www.roadtothemiddleclass.com. His Road to the Middle Class is forthcoming.

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Faith & Purpose

“When we began first to preach these things, the people appeared as awakened from the sleep of ages—they seemed to see for the first time that they were responsible beings...”
Finke, Stark, The Churching of America, 1776-1990

Mutual Aid

In 1911... at least nine million of the 12 million covered by national insurance were already members of voluntary sick pay schemes. A similar proportion were also eligible for medical care.
Green, Reinventing Civil Society

Education

“We have met with families in which for weeks together, not an article of sustenance but potatoes had been used; yet for every child the hard-earned sum was provided to send them to school.”
E. G. West, Education and the State

Living Under Law

Law being too tenuous to rely upon in [Ulster and the Scottish borderlands], people developed patterns of settling differences by personal fighting and family feuds.
Thomas Sowell, Conquests and Cultures

German Philosophy

The primary thing to keep in mind about German and Russian thought since 1800 is that it takes for granted that the Cartesian, Lockean or Humean scientific and philosophical conception of man and nature... has been shown by indisputable evidence to be inadequate.
F.S.C. Northrop, The Meeting of East and West

Knowledge

Inquiry does not start unless there is a problem... It is the problem and its characteristics revealed by analysis which guides one first to the relevant facts and then, once the relevant facts are known, to the relevant hypotheses.
F.S.C. Northrop, The Logic of the Sciences and the Humanities

Chappies

“But I saw a man yesterday who knows a fellow who had it from a chappie that said that Urquhart had been dipping himself a bit recklessly off the deep end.” —Freddy Arbuthnot
Dorothy L. Sayers, Strong Poison

Democratic Capitalism

I mean three systems in one: a predominantly market economy; a polity respectful of the rights of the individual to life, liberty, and the pursuit of happiness; and a system of cultural institutions moved by ideals of liberty and justice for all. In short, three dynamic and converging systems functioning as one: a democratic polity, an economy based on markets and incentives, and a moral-cultural system which is plural and, in the largest sense, liberal.
Michael Novak, The Spirit of Democratic Capitalism

Action

The incentive that impels a man to act is always some uneasiness... But to make a man act [he must have] the expectation that purposeful behavior has the power to remove or at least to alleviate the felt uneasiness.
Ludwig von Mises, Human Action

Churches

[In the] higher Christian churches� they saunter through the liturgy like Mohawks along a string of scaffolding who have long since forgotten their danger. If God were to blast such a service to bits, the congregation would be, I believe, genuinely shocked. But in the low churches you expect it every minute.
Annie Dillard, Holy the Firm

Conversion

“When we received Christ,” Phil added, “all of a sudden we now had a rule book to go by, and when we had problems the preacher was right there to give us the answers.”
James M. Ault, Jr., Spirit and Flesh

Living Law

The recognition and integration of extralegal property rights [in the Homestead Act] was a key element in the United States becoming the most important market economy and producer of capital in the world.
Hernando de Soto, The Mystery of Capital

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