A Bad Week For Market Capitalism

Does AIG Spell the end for strict Capitalisism; or as it was know in biblical times: Worship of the Golden Calf.


by Edmund Ross


With a single act the concept of "conservatism" as espoused by centuries of free market capitalists is washed away. The heart and soul of the ideology; small government, low taxes, and free markets; has been exposed as nothing but a fair weather ideology, something that works when things go well and fails when circumstances do not. The U.S. government bailout of Insurance Giant AIG demonstrates the failure of the conservative ideology and exposes its proponents as frauds.


"We're in trouble, save us" was the call that came out from insurance giant AIG after its high risk gamble produced a downside it could not cope with. That AIG asked for the government nationalization of itself is only a little surprising since the alternative was bankruptcy. That the rest of the "free market" proponents are sighing with relief is the truly amazing story.


First; the only institution with the ability to save the insurance giant is big government, the same big government the proponents hate.


Second; AIG's failure is not related to tax policy, government regulation, trade tariffs, or any of the other principles the proponents hold up as the reasons business struggle to prosper. AIG's failure is because it played in markets it thought it understood, but didn't. AIG's failure is failure of businessmen doing business poorly.


Third; the calls for nationalization of the insurance giant demonstrates the hypocrisy of those same people who want government to get out of the way of business and economics. All of a sudden they need this government to save them. They need all that tax revenue they hate collecting to bail out a major player whose collapse could endanger the entire financial system. If there wasn't a big government ready to play an active role there might not be much of a financial system left.


When a conservative think tank such as the Heritage Foundation or CATO Institute calls for free trade and less government, AIG is the three letter response that destroys the myth they are perpetuating. When the small government ideologues such as Steve Forbes make their case for the evils of government, AIG is the three letter response. When an individual asks for government assistance because he is either unfortunate, reckless, lazy, or simply unlucky, AIG is the response. When "push came to shove" the free market conservatives blinked and with that blink an entire ideology came crumbling down. The age of the welfare state is back and the welfare the state is protecting belongs to the very people that hate the concept.


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The Nazis, Fascists and Communists were political parties before they became enemies of liberty and mass murderers.