Governors Against State Bailouts

In times of crisis, government officials should have the courage to stand up against mob mentality. Currently, the mob has a “bailout mentality” but instead of opposing it as the calm voice of reason, it is being championed by politicians who are the first to panic.

Thanks to Rick Perry and Mark Sanford for being Governors Against State Bailouts in the WSJ:

[T]he bailout mentality threatens Americans’ sense of personal responsibility.

In a free-market system, competition and one’s own personal stake motivate people to do their best. In this process, the winners create wealth, jobs and new investment, while others go back to the drawing board better prepared to try again.

To an unprecedented degree, government is currently picking winners and losers in the private marketplace, and throwing good money after bad. A prudent investor takes money from low-yield investments and puts them in those that yield better returns. Recent government intervention is doing the opposite — taking capital generated from productive activities and throwing it at enterprises that in many cases need to reorganize their business model.

From Wall Street, to the automakers, and even to New Orleans, the government is doing the opposite of what the free market dictates. Banks that make poor lending decisions should fail. Car companies that can’t produce a product at the cost that others can should fail. A city below sea level that is bombarded by hurricanes should fail. Failure is not only acceptable, it is good because it shows us how to improve. Failure is why we succeed.