Change.gov just opened a new option: Your Seat at the Table. It's a way of looking at the options currently on the table for economic strategies, education, whatever. We're invited to add our two cents on particular issues. Here's mine on the bailouts...
I’m not sure Wall Street or Detroit bailouts will do much good; besides, where do you stop? I’d rather see banks demoted to utilitiy companies, as Nassim Taleb put it in a Charlie Rose interview. No more fractional reserves. Let them make their money purely from interest on lending money they actually have in the vaults, less whatever they’re charging depositors for keeping that money in the vaults. As it is, they’re creating fiat money; then the government creates more fiat money to bail them out when they screw up, which is bound to happen sooner or later. And Detroit? “... bankruptcy is... the means by which bad companies... fix themselves. Bailouts are the means by which governments subsidize bad companies.” (Jonah Goldberg)
As for Main Street, let us take care of ourselves. Remember United Flight 93. Sure, we make mistakes, but we learn from them. If we know our union contract is to be renegotiated in three years, it’s a fool who doesn’t set aside some strike money. We can stop our own credit card debt. We can hedge our own retirement bets with several small pensions and a paid-off house and car.
More from Jonah: “The problem ... it makes private-sector decision-making very difficult. If your boss says he will lay off half his employees next month, but he doesn't know who yet, will you buy a new house this month?”
Along the lines of safety nets, however, there might be something in expanding Americorps and giving it competitive benefits. There are a lot of military bases that could be reopened to serve as staging points for emergency relief. The people who serve on a part-time basis could get short-term relief from unemployment, and at the same time begin to build themselves a small long-term pension plan separate from social security and whatever IRAs they also have going for themselves. This hedging of retirement bets would allow us to protect ourselves from both Wall Street and government.
