We Are All Parasites Now

Before the fateful second House vote, let’s review “how we got here” — which is essential to know, if we are not to repeat the same mistakes again.

From economist Russell Roberts in today’s Wall Street Journal:

Beginning in 1992, Congress pushed Fannie Mae and Freddie Mac to increase their purchases of mortgages going to low and moderate income borrowers. For 1996, the Department of Housing and Urban Development (HUD) gave Fannie and Freddie an explicit target — 42% of their mortgage financing had to go to borrowers with income below the median in their area. The target increased to 50% in 2000 and 52% in 2005….

Fannie and Freddie played a significant role in the explosion of subprime mortgages and subprime mortgage-backed securities. Without Fannie and Freddie’s implicit guarantee of government support (which turned out to be all too real), would the mortgage-backed securities market and the subprime part of it have expanded the way they did?

Now, what’s Congress’s answer to this?

To nationalize the bad loans — thus formalizing the taxpayers’ obligation to underwrite the rampant irresponsibility that led to this mess in the first place.

The welfare state established the basic moral principle we now see in all its ugliness: that responsible taxpayers are to be sacrificial servants of the irresponsible — that they are to buffer the irresponsible from the destructive consequences of their actions, by absorbing that damage themselves.

But now, we are adding the following amendment to this premise of moral cannibalism: that the greater and more destructive the irrationality caused by others, the more immediate and pressing is the taxpayers’ moral duty to absorb the harm onto themselves.

The basic argument used to push this bailout is that the irrational institutions that were most responsible for the credit crisis are too big, and the harm that they cause too great, to be allowed to fail — i.e., to absorb the consequences onto themselves. The logical conclusion? That gigantic destructive consequences must therefore be transferred onto the backs of those who were not responsible for them.

The fundamental “redistribution” that goes on in our welfare “entitlement” state is not a transfer of money; that’s just a manifestation of its underlying immorality. The fundamental “guarantees” are not of money, but of other people’s money — as a matter of moral entitlement.

What is being transferred in our “entitlement” state is moral responsibility. What we are witnessing is a transfer of rewards and penalties from those who caused them, to those who didn’t. In this moral inversion, it is the evil and irrational who are rewarded, while the good and rational are punished.

And it is clear that the impetus for enshrining these predatory premises comes from the American middle class — in order to “guarantee” their own middle-class “entitlements.” We are sacrificing the producer to the parasite…and to the predator.

After the triumph of the economic interventionist theories of John Maynard Keynes, Richard Nixon infamously said, in 1971, “We are all Keynesians now.” Many observers of this current bailout hysteria have amended his catch-phrase, chirping, “We are all socialists now.”

Well, let’s be even more blunt, adding some refreshing ethical candor:

We are all parasites now.

And with that realization, a lot more than capitalism stands on the precipice.

Robert Bidinotto is the editor of The New Individualist. Visit his blog at http://bidinotto.journalspace.com.

http://online.wsj.com/article/SB122298982558700341.html