American Thinker: Progressive Fallacy Number 667: Wealth Redistribution Creates Societal 'Harmony'

Progressive preachers probably identify with Chinese President Hu Jintao's intention to reduce his citizenry's income gap in order to create a "harmonious society."  The Communist's sentiment saturates the politics of the Democratic Party.

Not to be outdone by Hu, British Prime Minister David Cameron recently complained that unequal societies rank low as measured by "almost every quality-of-life indicator."  Cameron didn't mention that the most unequal societies are the ones uglified by the most tyrannical elitists.  The tyranny, not the inequality, degrades quality of life.  In a society of laws, such as the United States, even the poor live more comfortably than almost everyone in oppressed societies.  The truth is that in prosperous cultures, when income gaps increase, high earners' wealth pours into technological innovations, which raise quality of life for all people.

But truth means little to redistributionists.  Class warfare gospel dominates most "when the rich get richer, the poor get poorer" arguments.  Multi-billionaire Warren Buffett prescribes confiscatory inheritance taxes designed to humble the superwealthy.  French socialist Dominique Strauss-Kahn wants "a new global growth model" because "gaping income gaps threaten social and economic stability."  Barack Obama demonized high earners and faulted America for having "the greatest income inequality since any time since the gilded age."  Progressives in general envision economic justice -- indeed, social justice -- through forced "fairness" lenses.

http://www.americanthinker.com/2011/03/progressive_fallacy_number_667.html

Former Clinton Official Paid $26 Million by Fannie Mae Before Taxpayer Bailout Now on Obama Shortlist to Run FBI | CNSnews.com

Previously, I have offered some explanations for the financial melt-down, primarily the corruption and incompetence at Freddie Mac & Fannie Mae in failing to see the predictable consequences of their irresponsible behavior.  Some on this List have doubted that the government could possibly act so irresponsibly, including myself at one time, or that Congress actually authorized offering loans to people who could not afford homes.  So for your edification, rather droll amusement, and general information, here is Ms. Gorelick's official explanation of what Congress and Fannie were up to, and how they justified their irresponsible actions:
 

In 2001, Gorelick announced that Fannie was buying subprime loans encouraged by the Community Reinvestment Act (CRA) and bundling them as securitized financial instruments. Securities made from bundles of guaranteed mortgages were to contribute to the banking crisis later in the decade.

"Fannie Mae will buy CRA loans from lenders' portfolios; we'll package them into securities; we'll purchase CRA mortgages at the point of origination; and we'll create customized CRA-targeted securities," she said in 2001. "This expanded approach has improved liquidity in the secondary market for CRA product, and has helped our lenders leverage even more CRA lending. Lenders now have the flexibility to use their own, customized loan products."

In remarks before the American Bankers Association on Oct. 30, 2000, Gorelick explicitly how the procress would work and what Fannie Mae would do to make it feasible for banks to lend to low-income applicants.

"We will take CRA loans off your hands--we will buy them from your portfolios, or package them into securities--so you have fresh cash to make more CRA loans," she said. "Some people have assumed we don't buy tough loans. Let me correct that misimpression right now. We want your CRA loans because they help us meet our housing goals."

Now, who do you supposed provided Fannie with its "housing goals"?  Yes, if you said Congress, then you score 100% on the test.  What more can I say?  These people convict themselves out of their own mouths.  Incidentally, instead of being put into jail, Ms. Gorelick happens to be on the Anointed One's "short list" for FBI Director.  Isn't that just the perfect place for her!  I couldn't make this shit up it's so far-fetched.  Unfortunately, it is the reality of the current administration and of the one just preceding it.

http://cnsnews.com/news/article/clinton-official-embroiled-911-controver

Laissez-Faire Capitalism Not Cause of Melt-Down

The reason for the melt down was, essentially, Freddie Mac and Fannie Mae, quasi-government entities, were told by Congress to enable people who could not afford houses to make it possible for them to buy houses with little or no money down, and with zero due-diligence as to sources of income to pay the mortgages.

Lenders then were guaranteed that Freddie and Fannie would buy such mortgage notes, thus relieving the originators of those loans of any liability.

Congress put the full faith and credit behind these securitized notes now repackaged by Freddie and Fannie who in turn sold them to other investors.  I understand that many of these securities then became the linchpin for other financial instruments called derivatives.

In effect, a hundred thousand dollar mortgage might back millions of dollars in further credit, secured only by an overpriced, speculative property whose owners may have had but a couple of thousand in initial equity, if that much--about what it would cost to make a security deposit and last month's rent on an equivalent rental home.

What made this boom possible was Uncle Sam's willingness to secure these loans, when there was nothing to secure them in reality beyond speculative dreams.

This situation could not possibly happen in a capitalist system, because government would have no part to play in guaranteeing a bank's poor judgment about what constitutes a secure loan.  Historically, banks have required 20% down payment and perform a stringent "due diligence" and they would have done that in this situation had the government not required them to make easy loans in the first place and in the second to buy the bad loans as soon as they were created.

From beginning to end, this financial debacle was completely and totally the result of government policy and actions.  It was the direct result of Congress passing laws requiring that banks make bad loans.  The Bush Administration and Congress are both responsible for the ensuing catastrophe.  But keep in mind, Congress was run by Democrats and the people in charge of oversight, people such as Barney Frank, stated over and over again that these bad loans were perfectly fine and dandy and that the Bush Administration's warnings could be safely rejected. 

Bush didn't do enough, and Congress is primarily responsible, but however you come out on that score, the bottom line is that the government created this catastrophe, not private businessmen, and was caused not by under-regulation but by government policies explicitly designed to increase home ownership by people who could not afford to own homes.

Why Does Business Support Both Political Parties?

I was recently asked by a friend to explain why men such as Jeffrey Immelt and other large corporations in the United States such as Goldman Sachs financially support both Democrats and Republicans, even as one party would seem to have the voters believe it supports businessmen and the other that it wishes to destroy them by taxing and regulating businessmen out of existence?

The facts my friend cites are not in dispute, and reflect the great depth of corruption in our current crony capitalist hybrid mixed economy.  One could understand why a corporation might support Republicans, but why would Goldman Sachs support the liberal and socialist program of the Democrats, a program whose seeming goal would lead only to its destruction?

The facts demonstrate the insight made by many who run our largest industries that:  1) the US government is a legalized criminal organization seeking "bribes" in the form of political contributions in exchange for certain "protections" from government regulatory, anti-trust, and taxing thuggery, and, 2) both major political parties are completely and irredeemably corrupt so the smart move is always to support both in case one or the other is able for the moment to delude enough voters to support its candidates.

It is true, not all businesses, not even all large businesses necessarily subscribe to this view of our government, but whether or not it represents their conscious views, it nonetheless offers a good theory why such businesses financially support politicians otherwise dedicated to their apparent destruction.  After all, when was the last time you heard a socialist, a Democrat, or even a Republican for that matter, defend businessmen?

Ayn Rand had some interesting things to say in a lecture given in 1962:

"Businessmen [her italics] are the one group that distinguishes capitalism and the American way of life from the totalitarian statism that is swallowing the rest of the world.  All the other social groups--workers, farmers, professional men, scientists, soldiers--exist under dictatorship, even though they exist in chains, in terror, in misery, and in progressive self-destruction.  But there is no such group as businessmen under a dictatorship.  Their place is taken by armed thugs:  by bureaucrats and commissars.  businessmen are the symbol of a free society--the symbol of America.  If and when they perish, civilization will perish.  But if you wish to fight for freedom, you must begin by fighting for its unrewarded, unrecognized, unacknowledged, yet best representatives--the American businessman."

Much has happened since 1962 when Ayn Rand said those words, and while Soviet communism has imploded and Red China has permitted a great deal of economic freedom for its citizens, we are now seeing on an unprecedented scale the slow, seemingly inexorable slide in the United States to a situation where leading businessmen such as Jeffrey Immelt of GE have now definitely moved into that twilight zone where the shift to the Dark Side becomes inevitable. 

 

Immelt is part businessman but now he is more of a commissar, a government thug pretending he is the CEO of a private corporation.  Immelt is not kept in corporate power because he has worked for the interests of the corporation--its stock has declined the entire period of his leadership--but because of his willingness to do the bidding of the federal government, in the present case, of President Barack Obama and the President's liberal allies on Capital Hill, all of whom are not necessarily liberal or Democrats.

Such men as Immelt have conceded the moral high ground to the socialists--that the good consists in sacrificing one's self, one's interests, for the "higher" good of society, whose voice is given expression by whichever gang of thugs is able to seize political power in the society at a given time.  Immelt and the others like him in the twilight are perfectly willing to play the game the socialists and liberals have invented and have become the willing milch cows of the corporate welfare state that we now have.

The socialist Democrats do not want to destroy businessmen, they want schmoos--businessmen who take delight in being devoured by the state.  Ultimately the schmoo is eaten alive, but the process can take quite a while and socialists have never been too concerned about the future anyway so long as they are able feed on the living body today.  They demonstrably have no problem mortgaging the future of the country, either, in order to continue feeding their social welfare programs, incidentally keeping themselves in power.

So Immelt and gang--the heads of Goldman Sachs for intance--understand the new rules and since they have already conceded they have no right to exist, that they have no rights as individual and exist merely on the sufferance of government, on "society's" need for their productive abilities, they will be permitted to keep some of their earnings, and, indeed, will be permitted to keep more of their earnings to induce other businessmen not willing to make schmoos of themselves, to alter their views and willingly surrender their interests and productivity to the service of state without a fight.

The picture is gruesome, a farce of unimaginable proportions.

And there is only one way to end it:  by rejecting the moral premise of the entire system that the good consists in the sacrifice of self to the interests of the collective.  It consists in the recognition and insight that the true good of everyone can never be advanced through the sacrifice of the individual, that society is, first and foremost, a collection of individuals, and that individuals have the moral right to exist, which means:  they have the right to the products of their own labor, intelligence, and talent.

Capitalism Magazine - Pass a Law! Liberalism to Its Ultimate Conclusion

Most people want the supposed benefits of a welfare state; nearly everybody welcomes something for nothing. But increasingly, it's apparent to all involved that you can't get something for nothing. And when you force others to give you something of theirs for nothing, you end up with unintended consequences -- such as less of everything, for everyone! Case in point: Western Europe, especially Great Britain, where the welfare state is collapsing within itself. Case in point: California. And New Jersey. And now Wisconsin.

Capitalism Magazine - Pass a Law! Liberalism to Its Ultimate Conclusion