ARTICLE

Dr. Richard J. Grant If the purpose of the new Public-Private Investment Program (PPIP) is to make the financial markets work better, then it will fail. If the purpose is to transfer wealth from U.S. taxpayers and holders of U.S. dollars to those who are politically favored, then the plan will succeed. It always amazes me how much effort some people will expend to get something for nothing. Increasingly, the role of the federal government has become one of aiding and abetting such efforts. As the Treasury secretary takes on his new role as wet nurse to the financial industry, we should be under no illusion as to who is really being milked. This latest plan, like most government plans, is a net destroyer of wealth. Does it not make sense that, if you want markets to work, you should not interfere with them? But I hear you respond, “We need a basic legal structure for markets to work!” Do you mean things like laws against theft and fraud? Do you mean laws against taking wealth by force from one group of people and giving it to another group and then telling us that it is an “investment” for everyone’s benefit? Word Games Used I thought the Constitution was quite clear on this matter. But it is just a bunch of words, and, in our brave new world where “troubled assets” can suddenly be transformed into “legacy assets,” we know how to handle words. We can even divert $700 billion into failing businesses and call it a “stimulus package.” Though I am waiting for someone to ask the donors of these funds just how stimulating it was for them. Some donors haven’t been born yet. Rather than let us feel the full consequences of our voting habits, our political leaders prefer to spread the taxes over many years. The new government debt will be serviced forever by our descendants. But did we really score one for the present generation? No way. Real current resources have been commandeered by the government and handed over to those they seek to reward or control. Our legal structure protects us, right? Sorry, no. The trend in America is an increasing disrespect for private property and for any private initiative. That means there is an increasing disrespect for people. When will we stop pretending that theft and fraud are OK when the government does it? Sophomoric Document The sophomoric document that introduces the PPIP is full of false assumptions. We don’t have a “broken market,” we have a government that has been interfering with the market. We wouldn’t need the government to “facilitate price discovery” if the government weren’t already distorting prices. It is precisely because the government does not want true market prices to be revealed that it chooses to go 50-50 with private bidders to buy up, and bid up, speculative assets from companies that are officially “too big to fail.” We will never know the free-market prices. But we do know that the U.S. government has become too big to succeed. ### Richard Grant is professor of finance and economics at Lipscomb University and a scholar at the Tennessee Center for Policy Research, an independent, nonprofit and nonpartisan research organization committed to achieving a freer, more prosperous Tennessee through the ideas of liberty. Visit TCPR online at: www.tennesseepolicy.org.