For average Americans watching from the sidelines, the proposed mortgage
bailout looked like something straight out of the Communist Manifesto.
Perhaps that is why it was so unpopular everywhere but Wall Street and
Washington, D.C. As one author describes, the bailout does look like something
Karl Marx would have approved.
In his Communist Manifesto, published in 1848, Karl Marx proposed 10 measures
to be implemented after the proletariat takes power, with the aim of centralizing
all instruments of production in the hands of the state. Proposal Number
Five was to bring about the "centralization of credit in the banks
of the state, by means of a national bank with state capital and an exclusive
If he were to rise from the dead today, Marx might be delighted to discover
that most economists and financial commentators, including many who claim
to favour the free market, agree with him.
The author goes on to point out that only the Austrian School of economics
realistically opines that the boom cannot go on forever. Interestingly,
I have been reading a history and analysis of the Great Depression by
Murray N. Rothbard, called
America’s Great Depression. You can download a PDF copy of the book from the Mises Institute (which
embraces the Austrian School of economics). Rothbard was (and may still
be) with the
Mises Institute. The essential premise of the book is that there will always be a boom
and bust cycle in the economy and that government intervention can lengthen
the boom cycle, but when the bust cycle comes around it will be much worse.
That is what we saw with the Great Depression and it looks like that may
be what is happening now.