Whether it’s GM or the banks, states or municipalities, or Greece and Ireland, the concept of one entity suffering at the expense of another is now sacrosanct. Why are we seeing so many bailouts today? Ask the left and you’ll get a simple answer—the Bush recession. Bailouts are necessary to maintain stability when the economy falters. Corporate greed and the Bush tax cuts gave us this mess, and government intervention is necessary to keep everything from falling apart.
But there’s a better answer, and it’s equally simple—COLLECTIVISM. “Strength in numbers” can easily turn into “the producers carrying the non-producers” when the irresponsible among us learn to game the system or simply refuse to make tough choices. We see a good example in Europe. The EU is not obligated to bail out Greece or Ireland, but the collective system they have created allows financial poison from one country to spread more easily to its neighbors. This not only creates an incentive for Germany, France, and others to support bailout efforts, but also creates incentives for less prosperous members to engage in risky growth and development schemes because they won’t be held fully accountable for their actions.
Of course, not all forms of collective behavior are bad. VOLUNTARY collectivism occurs all the time. Purchasing life insurance is a good example. Things work fairly well in this instance because there is no incentive for any of us to die in order to collect the benefits. When we engage in voluntary collectivism, we can evaluate the terms of the deal for ourselves. Our liberties are retained.
The real problems are with INVOLUNTARY and DE FACTO forms of collectivism. A good example of INVOLUNTARY collectivism is the “right to healthcare.” Because one’s right is another’s obligation to pay without any say in the matter, it creates a perverse incentive for all of us to overuse the system. It’s just common sense that there would be fewer trips to the doctor if we had to pay out of pocket.
DE FACTO collectivism refers to collective behavior that does not exist in legal form, but certainly exists in practice. De facto collectivism is an insidious threat because is it not as easy to identify. Freddy and Fannie are not government-owned per se, but their financial obligations will always be backed by the taxpayers. GM is supposed to be a private corporation, but its union and political ties give it seemingly endless government backing. A bank that is “too big to fail” can receive taxpayer backing when “too many jobs” are at stake.
Collectivism ALWAYS works against initiative, creativity, and individual responsibility because benefits and failures are shared. De facto collectivism exists because many can’t see it, refuse to address it, or simply benefit from it. But those who stand to gain—an automaker, a large financial institution, a nation like Ireland, or even an illegal immigrant at the ER—certainly understand what’s going on. De facto collectivism is at the root of most of our economic and social problems. It’s time we recognize it for what it is. It’s also time for the Republican Congress in Washington to put an end to it. The solution is simple—JUST SAY NO.