Risk for Thee but Not for Me

Has your corporation acted recklessly? Has this corporation habitually made appallingly stupid decisions? No worries. Government is here for you.

The feds will rescue anyone, it seems, except those suckers who dutifully mail their mortgage checks in on time every month.

These reliable citizens, in fact, soon will be propping up the for-profit businesses of Fannie Mae and Freddie Mac (not to mention Bear Stearns) in the de facto nationalization of a huge chunk of the mortgage industry.

Stockholders of Fannie and Freddie have profited for decades from an implicit taxpayer guarantee on their business while pretending that such a pledge didn't exist.

Well, it does. We know this because as a reward for a feeble job done, executives may walk away with $15 million in severance pay.

You? The bailout allegedly will cost taxpayers approximately $200 billion. And as you know, federal projections are always on target.

And where will it end? Airlines already have benefited from the largesse. Detroit's auto industry, it has been reported, hopes to secure $50 billion in additional federal loans to, you know, help out.

Well, because the Big Three built cars no one wanted, failed to embrace new technologies, offered sweetheart deals to executives, and surrendered to predatory union demands … naturally, they deserve a cushy government loan. (I only hope newspapers are afforded such compassionate treatment. We're a national treasure, after all.)

"One of the most depressing things about the current situation," explained Russell Roberts, a professor of economics at George Mason University, on his blog, "is that people will try and find different ways to 'fix' the mortgage market when it was the very attempt to 'fix' it that brought us to where we are today."

Economists disagree on whether the Freddie and Fannie bailout was avoidable at this point in the game.

So the question now should become: How do we avoid putting other vital industries in similarly precarious situations when we "fix" them?

Freddie and Fannie were government concoctions intended to help citizens, not monopolize the mortgage market.

Now, not only has a Republican administration boosted an incontrovertibly unfree market but also Democrats are selling Americans on the idea that similar centralization and regulation will benefit us in the areas of health care and energy.

We know that when any industry is insulated from risk, it makes reckless decisions. Economists call this "moral hazard."

Federal government is moral hazard central.

As it was when, grousing about his subsidies that were being held up in Congress, one wind energy executive recently — and probably unintentionally — let slip, "We don't want to build a giant factory that the market doesn't need or want."

If there is no market, perhaps we have to be more realistic about a product's viability, whether we are talking about energy, health care or mortgages.

Yet somehow, the national conversation has been dominated by those who argue we need more of the very ingredients that cause these messes.

Is it the end of privatization? No.

"Rather," economics columnist James Pethokoukis, of U.S. News & World Report, asks, "doesn't this make the case for privatization, and powerfully at that? Don't forget that we are also sitting here with Social Security and Medicare leaving taxpayers on the hook for more than $50 trillion in liabilities."

Isn't it ironic that government bars a citizen from risking his own Social Security funds because it's too chancy yet uses your money to bail out companies that have engaged in the very behavior government supposedly is safeguarding us from?

And really, what's riskier than letting Washington handle your money?

David Harsanyi is a columnist at The Denver Post and the author of "Nanny State." Visit his Web site at www.DavidHarsanyi.com. To find out more about David Harsanyi and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com.

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