By Freedom Newspapers
The U.S. Senate recently approved millions of dollars in cash compensation for California farmers, not merely to offset this year’s freeze losses but also for last year’s losses during a heat wave.
It seems there’s no adverse financial consequence the government isn’t willing to undo by doling out other peoples’ tax money.
“(T)he Senate has now approved millions of dollars of relief to help these struggling farmers and dairymen recover from the financial setbacks they have endured because (of) these nature disasters,” Sen. Dianne Feinstein, D-Calif., said of provisions in the Fiscal Year 2007 Supplemental Appropriations Bill.
The practical fallacy of this pretend charity is in believing government can continually bail out private enterprises. It can’t. There’s a limit, even to tax funds. The moral fallacy is thinking the government should bail out private enterprises. It shouldn’t.
True charity is when one voluntarily parts with his own money to help the needy. That’s gracious, noble and self-sacrificing. Pretend charity is when government gives other peoples’ money to the needy. That’s not gracious or noble.
Pretend charity also discourages personal responsibility and perverts free enterprise. A strength of capitalism is that investments must be weighed against risks. Private investors have a vested interest in making enterprises profitable. They are reluctant to overextend. That’s because they have something to lose.
But if government guarantees that an enterprise cannot fail, the process is corrupted. Risk diminished by government bailouts ceases to be genuine risk.
Instead it morphs into reimbursed operating expenses.
The same principle applies when people build homes in high-risk areas vulnerable to hurricanes. After the inevitable disaster, a private individual is unlikely to rebuild at his own expense in the same location. But if the government restores losses and insures against future losses, risky behavior like building in hurricane alley is more likely to continue because risk is reduced. Someone else will absorb the loss.
Capitalism without risk of loss isn’t capitalism. It’s also unsustainable because not everyone can be subsidized. That makes it fundamentally unfair because government picks winners and losers by extending guarantees to some and not to others. And politicians posturing as compassionate are merely pretenders, not statesmen.
It’s easy to be charitable with other peoples’ money.