MarketWatch is reporting that Rupert Murdoch, the billionaire media tycoon and infamous founder of the dastardly Fox News channel, believes that the current recession may be coming to an end:
Speaking to analysts on a conference call, Murdoch said: “There are emerging signs in some of our businesses that the days of precipitous declines are done and that revenues are beginning to look healthier.”
I hope Murdock is right, and that the economy has already bottomed out and is ready to begin expanding again. The last nine months have been harrowing, with heavy job losses and 40% – 50% losses in the stock market. All of us want to see a recovery, because we all want to begin earning back what we have lost.
Funny thing, though — liberals have recently been foaming at the mouth about conservatives actually wanting economic recovery to fail! Their reasoning seems to be that since we all “hate” Barack Obama (we’re all racists, you know), we are trying to do everything possible to make sure that our economy is destroyed, so that Obama won’t get re-elected in 2012. Yep – we’re going to destroy America simply because we can’t stomach the notion of having a black man in charge. Of course this makes about as much sense as the rest of the smears that liberals have been slinging at conservatives for the past forty years. I mean, really … what a great way to win elections — “We starve children! We make grandmothers eat dog food! We poison your water! We poison your air! We want to re-institute slavery! We club baby seals! We’re the Republican Party, and WE WANT YOUR VOTE!!!”
Liberals seem to have a difficult time understanding the difference between wanting the implementation of potentially harmful policies to fail, versus wanting the nation or economy as a whole to fail. Maybe this has something to do with their mindset during the past eight years. But whatever the reason, they are way off target.
Last week, the Obama Administration attempted to manipulate the settlement proceedings for the bankruptcy of Chrysler. Obama insisted that secured creditors settle for 29 cents on the dollar, while at the same time rewarding the UAW pension fund with a 55% share of the emergent company’s common stock. This is an unprecedented action; it cannot be traced to any application of known bankruptcy law, and it appears (at least on the surface) to be nothing more than a huge political reward by the Democrats for the steadfast financial support of the UAW.
Liberals may applaud such tactics because they seem to serve the “common good” (i.e. “workers” triumph over “the rich”), but conservatives are appalled by them, because history tells us that government interference in private contracts is ultimately harmful to long-term economic growth. When conservatives oppose large-scale government interference in private business, it is because such interference always leads to higher risk, decreased investment, and the abuse of power through cronyism. It has nothing to do with “greed” or “making the rich richer while the poor stay poor.”
A few years ago, Peruvian economist Hernando de Soto authored a book entitled The Mystery of Capital, in which he explored the differences between Western states that consistently apply the rule of law, and Third-World or “banana republic” dictatorships that allow ruling elites to nullify private contracts and seize and redistribute wealth subjectively, whenever they feel like it. de Soto concluded that the rule of law is essential for any kind of long-term, sustained economic growth.
He also pointed out that even if individuals are allowed to earn and keep a modest amount of wealth, strong overall economic growth will be stunted unless those individuals are willing to invest their wealth. The willingness of an individual to invest their wealth is directly proportional to the risk involved in that investment. The rule of law, and its resulting establishment of a system where everyone, rich or poor, peasant or aristocrat, is treated as equally as possible, is what lowers investment risk to an acceptable level. On the other hand, widespread state interference substantially increases investment risk, because investors cannot be assured that their money will be safe if the government decides to void private contracts and subsequently confiscate and redistribute capital.
Just how extensively can state interference harm a multi-billion-dollar company? We needn’t look any further than Venezuela’s state-owned oil company, PDVSA. In the 1980’s and 1990’s PDVSA was one of the best-managed oil companies in the world. It earned an enormous amount of money, and thus became a very tempting target for Venezuelan President Hugo Chavez. In 2002, workers and managers at PDVSA who were concerned about Chavez’s plans to prevent any chance of privatization for PDVSA organized a lock-out that shut down Venezuelan oil production for nearly two months. Chavez’s political operatives ended the lock-out through coercion and intimidation. The organizing workers were fired, and the new PDVSA management organized an armed militia to prevent any future uprisings.
Once Chavez gained complete control of PDVSA, he took over the company’s luxurious high-rise headquarters in Caracas and turned it into a tuition-free public university for all Venezuelans. He also diverted the company’s enormous cash revenue into the government coffers, and proceeded to give away a substantial portion of it in the form of state subsidies. And he appointed political allies and cronies to take the place of the experienced business managers and petroleum engineers who had been terminated. These men had no experience in the petroleum industry, and oil spills, fires, and other problems quickly became common-place. The quality of refined petroleum products also suffered. Chavez turned PDVSA into virtually the sole source of revenue for his government, and in the process he shut the company’s books, completely eliminating any kind of accountability. He gambled that continually rising oil prices would continue to make up for its poor management.
While American oil companies have stayed profitable through last year’s sharp spike and subsequent crash of oil futures pricing, PDVSA ended up in deep trouble. It has lost its major line of credit, it has been forced to cut salaries and drastically reduce spending, and it has also been forced to issue $2 billion in bonds in order to cover its debt. But even that isn’t enough. Faced with unrest from independent Venezuelan oil service providers who haven’t been paid in months, Chavez has ordered their private assets to be seized, and a large portion of the oil service industry nationalized.
Every time it has been tried, nationalization and government control of industry has produced similar results. If our current recession has really bottomed out and the worst times are behind us, then we must do everything we can to ensure that we have a strong free market that produces an actual economic recovery. Because the Democrats insist on giving us a massive, suffocating expansion of government power instead, we will continue to oppose them. If that makes us greedy racists, then so be it.