WASHINGTON, March 24, 2014 — Lawrence Summers, a powerful voice in the bank bailouts, recently stated, “it is not enough to identify policies that would reduce inequality. To be effective, they must also raise the incomes of the middle class and the poor.”
It is clear to Summers that government action is the answer to income inequality.
Large inequality gaps are a sign of something wrong with a system. The beauty of the free market is that it is a just system that in time punishes immorality.
Government interference is usually done to benefit one group over others in society, and thus disrupts the free market and slows down the change in the mode of producing a good or service to benefit that group.
It takes resources to protect interests of a group. Money is a nation’s claim to wealth. Banks are ‘respected’ because they are expected to look after that money. If they misuse that trust, and in time the market will ask you to vacate. The great recession was the market indicating banking must change out with the old. The bailout was Washington saying no need for change as it protected interests of a few.
The government sucked from the rest of society what resources remained and gave it, and continues to give it, to the financial titans. The same government then makes studies about income inequality when they are the ones who exacerbated the problem.
The fall of Lehman brothers was an indication to allow change to occur. Instead, the government poured resources into saving a failed institution. Allowing the market to do its job, to cull the failed business, might have been painful but we would have ended up with a leaner and more advanced financial sector.
Fixing income inequality requires the same approach — allowing the market to correct the inefficiencies. Because the U.S. government panicked and deserted the principles of freedom and justice, the correction is going to be more painful. But society must accept freedom and justice, and the power of the free market, or risk even more inequalities. The government does not have a magic power to ease income inequality. There really is no more money to throw at the problem.
The fault lies with human beings and what they believe should be expected from a government. There is no Utopia. The government might promise to fix the economy, and it may even have good intentions of doing so, but it cannot. Truly believing in the market is to believe in the human mind, our own and others, it is to accept that the economy is run by and reacts to human actions not mystical concepts.
The free market allows us to improve as a society over time as we learn from past mistakes. When most of the resources are given to a few, those few are likely to take action to benefit themselves. Anybody who justified the bank bailouts cannot at the same time complain about inequality. The market was saying this sector has failed and deserves less resources, yet the government said it deserves more resources, defying all logic.
As the solution remains the same if we truly want a better world, we need to return to the discipline of the past, the discipline that has broken down. We need to return to believing in justice, liberty and truth. And a free market is a part of that.
After the Lehman brothers collapse, the elite wanted to keep their positions no matter what the cost to the greater society as a whole. The government printed money to cover up real issues. This allowed the underlying issues to remain and inequality to become even more aggravated. Though money buys less and less, fewer people have that money.
Now is the time to reduce the government that serves interests of a few not by design but by adaptation of politicians to the needs of campaign funding. The Bill of Rights is the only thing standing in the way.
The free market is only thing that will ensure a free and prosperous future. The current inequality in incomes is the result of dishonesty and immorality at the highest levels. Instead of bank bailouts and skewed economic policies, the United States needs to truly allow the free market to operate. That is the only way to fix inequality and it is the only way to keep money honest.