Liberrants

Welcome to Liberrants, a blog dedicated to editorials, discussions, and studies of all things libertarian. Don't let the title mislead you; it's merely my attempt to be creative in describing myself as a "hopeful curmudgeon" who embraces the goal of the free, peaceful, economically vibrant society envisioned by America's founding fathers. Jump in! Contribute! Enjoy!

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A critically thinking curmudgeon whose goal, in addition to creatively venting about the imperfect world in which we live, is to induce critical thinking in others. The ultimate goal is to help bring about a peaceful world in which we can all live in freedom.

Friday, January 15, 2010

Another Fiat From the Economically Illiterate Simian-in-Chief

I was disgusted, but not at all surprised, to hear President Che Guobama yesterday demand that a “Responsibility Fee” (read: tax) be levied on the big U.S. banks that received bailout money over the last year. Declaring that he considered the seven and eight-figure bonuses that these banks are paying to their executive management “obscene”, the monkey-eared Socialist-in-Chief apparently believes that hitting Lloyd Blankfein, et al. in their wallets is the surest way to recoup all of the bailout money that these big bad banks have misused and otherwise spent in acts of bad faith. You see, in the Black Marionette's ideological universe, businesses are just like people and you can punish them just like a person and get the same results. That is to say, any punitive move taken against a business by “the law” will hurt only the big boys in the boardroom and the business's bank account. That'll show'em that they can't mess with the little guys without it comin' back on 'em!

What the Fatheaded Figurehead, like millions of other Amoricons fails to understand is that whenever a tax or other external expenditure is imposed upon a business, for whatever reason, that business responds to the additional burden in one of two ways:

1. By passing the costs of the expenditure on to its customers in the form of higher fees and charges.

2. By cutting back on services to its customers in order to bolster its profit margins to compensate for the increased cost of doing business.

Usually the business will do both of the above.

The point, one that any Austrian School economist will tell you is simple common sense, is that there is no such thing as a “business tax.” All taxes are ultimately “consumer taxes”, and the proposed “Responsibility Tax” will be no exception. The only effect that this “tax” will have is to leave the depositors and customers of these big banks, the vast majority of whom are ordinary working people like you and me, poorer by saddling them with new or increased service charges when the banks pass on to the customers the losses to their bottom line resulting from the “responsibility tax.” Also, banks facing hyper-taxation and regulation will find themselves suddenly with less capital. Less capital means, among other things, that loans to “little people”, such as entrepreneurs, homeowners, small business owners will become largely a thing of the past, or will be characterized by such steep interest rates as to be unaffordable. Look too for the banks to forgo improvement in services and infrastructure that would have made them competitive again, settlement of outstanding debt to repair their balance sheets, or other productive activities that might just help retard the current recession and represent small steps toward rebuilding the economy. The only “winners” that would emerge from such a tax would be demagogues like the Mulatto Messiah who could point to their parasitic constituencies and say “Look at me! I reined in the greedy capitalist banksters, just like I promised!”

But we don't have that to worry about, because all of this is pure posturing. Leaving aside the transparent and despicable attempt by a liberal ideologue to redefine “responsibility” in his own self-serving terms and to pander to his narrow (and shrinking) base, it is obvious to everyone by now that Obama, like every one of his predecessors in the modern era, is wholly owned by these very banksters he ostensibly wants to “punish.” It goes without saying that this latest eructation of mock indignation is nothing by scripted gas, a ploy by an already clearly failed president to salvage what little remains of his credibility by making mock threats against a particularly unpopular segment of the Establishment. The Wall Street gang, for its part, recognizes the need to throw (or make the appearance of throwing) a sop bone to the masses and has therefore gone along with this charade. The inevitable outcome will be a lot of loud blustering by the Obamunist and his cabinet, mock attempts at punitive legislation in the Lobbyist Chambers on Crapitol Hill, followed by the whole issue dying a quiet death as the Amoricon public's attention, in typical fashion, is diverted elsewhere. In short, business as usual. Meanwhile, the banks will continue to pay themselves fat bonuses and commissions while sweetening the Democratic Party's coffers with kickbacks and favors.

But what if His Holiness is serious in his threats to impose punishment on his Wall Street benefactors? Well, it's very likely that he will meet JFK's fate. Kennedy, after all, just happened to stop a bullet in Dallas a few months making moves to curb the Federal Reserve's power. As the banksters and the Fed are partners in crime, a move against one is a move against both.

So, in closing, look for business as usual between the Political Wing and the Wall Street Wing of the Establishment. The only “change”, if any, will be the smaller dollar figure associated with your bank account.

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