Free enterprise and government regulation
By Thomas E. Brewton
Lawmakers can dismount from their soak-the-rich hobby horses. Reality curtails business excesses; no need for help from Congressman Barney Frank.
The free marketplace has chastised hedge fund managers more effectively than any taxes or regulations congressional socialists might have concocted.
The Wall Street Journal in its July, 27, 2007, edition reports:
In recent weeks, news articles have described the decline in home sales and the back-up effects on other sectors of the economy: junk bonds, LBOs and hedge funds investing in those securities and various forms of derivatives. Heading a very lengthy list of troubled entities was Wall Street brokerage firm Bear Stearns, whose two hedge funds, with $10 billion in funds under management before the blow-up, are now worthless.
Led by Massachusetts (where else?) Congressman Barney Frank, lawmakers have been imitating a pack of hyenas on the prowl, eagerly surrounding hedge funds and circling for the kill.
Stirring their populist, class-warfare hormones was the huge personal profits made by hedge fund managers like Blackstone's Steve Schwarzman. At the IPO price for Blackstone when it recently went public, Mr. Schwarzman's net worth ballooned to a reported $7.5 billion. Many other hedge fund managers also ranked among the most highly compensated individuals in the country.
This display of income inequality was too much for Congressman Frank. Under the Keynesian and socialist economic doctrines of the liberal-Progressives, business profits can only have been made by stealing from the workers. Thus the Feds had an obligation to snatch those profits from hedge fund managers and return them to the labor unions. In a good socialist state, everybody is equally poor. (See Economic Class Warfare).
In the real world, the capitalist free-market works far more decisively and effectively than ham-handed government regulation and taxes. As I wrote in The Economics of Liberal Values:
Contrast this with the never-ending torrent of federal spending to buy voters' loyalty.
Thomas E. Brewton is a staff writer for the New Media Alliance, Inc. The New Media Alliance is a non-profit (501c3) national coalition of writers, journalists and grass-roots media outlets. His weblog is The View From 1776. Email comments to firstname.lastname@example.org.
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