Creative destruction is for the little guy

Over at the Agonist, Sean Paul-Kelley laments socialism for Big Finance. Calling it what it is, especially for such a normally liberal blogger, is a welcome shift in the blogospheric consensus:

What ever happened to creative destruction? It really is socialism for the big boys but cutthroat capitalism for the little people in this country. In my opinion, Bear Stearns, more than any other firm on Wall Street should be allowed to fail. No handouts, or bailouts from the Fed. If this were 1998, well, we all know what happened when Bear declined to aid in the bailout package of LTCM. So, that's one reason. But the other is this: the more the Feds prolong a real shakeout the worse it will be when it finally comes.

What I want to know is, why are we even asking whether or not any business should be "allowed" to fail? This is only an extreme example of the kind of malinvestment that government intervention creates. But this malinvestment has been occuring to a lesser degree day after day due to the privileges associated with the toxic mix of finance and government that has laid the foundation for this modern day Tower of Babel.

The bailouts also demonstrate what left libertarians have been saying for decades: that creative destruction is only desirable when it creates new opportunities for the investment class. Unemployment (lowering the bargaining power of labor), asset liquidation (quickly putting misallocated wealth to new purposes), the debasement of the currency - all of this is fine when it strengthens the hand of the elite. But when banks and investment houses start failing, God help us - the "economic infrastructure" is collapsing! Considering what the corporate state has given us for the past decades - war, oppression, surveillance, environmental damage, crony capitalism, all dutifully financed by these very institutions - what exactly is the infrastructure designed to support if not the very privileged elites who trade in our slavery?

Whatever suffering occurs because of a collapse of the system, remember: it's a correction for debt already incurred. Delaying it won't neutralize it any more for us than it will for the banks. Figure out what's important to you and live your life accordingly.

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Written on Friday, March 14, 2008