Cutting out the Middle Man
posted by Beth @ 10:43 AM
The president has also proposed savings on a much larger scale. The president has proposed ending the bank middle man for college loans, saving $94 billion over a ten-year period of time.In yesterday's (4-21-09) press conference, Mr. Gibbs used the above statement to defend the President's $100 million budget cuts. Set aside for the moment that $100 million is only 0.0028% of the $3.6 trillion budget, and stop to consider the full implications of this casual comment. This assertion flowed effortlessly from Gibbs as part of his explanation on how the government is going to save us money. In the very next sentence, he implies that private insurance companies needlessly duplicate coverage the government already supplies through Medicare. (video clip; transcript)
--Robert Gibbs, Press Secretary for President Obama
What does this reveal about the administration's beliefs on the relative roles of government and business in meeting the economic needs of this country?
Just who exactly is the "middle man" and what are the implications of cutting him out?
The "middle man" is private enterprise, and our leaders, in the highest executive office of our country, view private enterprise as less efficient than government.
What system views government as the preferred manager of business?
Socialism.
What system views private enterprise as the proper mechanism for economic transactions?
Capitalism.
It doesn't get much clearer than this.
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Attacks on "middlemen"... that's something to trigger deja vu:
The New York Times, speaking of Theodore Roosevelt in 1911:"... Col. Theodore Roosevelt told one hundred farmers, representing the Pennsylvania State Grange Association, that he believed the farmers and consumers of the country should get together and see what could be done to do away with the middlemen who eat up the profits of the farmer and make farm produce so expensive to city consumers."Then, in 1920, Franklin D. Roosevelt ,vying for Governorship of New York, is quoted thus:"Eliminate many of the unnecessary hands through which articles at present pass between the man who produces and the man who consumes..."
The New York Times, speaking of Theodore Roosevelt in 1911:"... Col. Theodore Roosevelt told one hundred farmers, representing the Pennsylvania State Grange Association, that he believed the farmers and consumers of the country should get together and see what could be done to do away with the middlemen who eat up the profits of the farmer and make farm produce so expensive to city consumers."Then, in 1920, Franklin D. Roosevelt ,vying for Governorship of New York, is quoted thus:"Eliminate many of the unnecessary hands through which articles at present pass between the man who produces and the man who consumes..."
The middle man has been much aligned by both the right and the left. Frequently, this is due to the failure to understand the crucial role that the middle man has in decreasing transaction costs. Middle men, such as a grocer or Walmart, decrease costs in time and material by collecting a wide variety of goods together in one place. This saves us from having to travel from one farm to another in search of milk, eggs, wheat, etc. Bankers are the legitimate middle men between savers and investors. Insurance companies have a role in placing themselves between us and risk.
What makes these middle men legitimate is that our association with them is voluntary. If we would prefer to go farm to farm, or to find our own lender, or to become a venture capitalists, we are free to do so. The complete illegitimacy of government as middle man is based on government's use of coercion to force relationships and transactions which would not occur by free choice. To suggest that the use of government to eliminate the middle man is efficient is to say that coercion is more "efficient" than freedom.
What makes these middle men legitimate is that our association with them is voluntary. If we would prefer to go farm to farm, or to find our own lender, or to become a venture capitalists, we are free to do so. The complete illegitimacy of government as middle man is based on government's use of coercion to force relationships and transactions which would not occur by free choice. To suggest that the use of government to eliminate the middle man is efficient is to say that coercion is more "efficient" than freedom.
This is just another, in a long line of asaults on captalism and the free market economy. Our government is destined to destroy that which has made us so prosperous, and has advanced our civilization thus far.
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