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Soros attacks capitalism with $50 million
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Left: George Soros, right: John Shattuck
George Soros has announced his intention to inject $50 million into an effort to “take back” economic studies from “free market zealots,” according to a recent report in Newsweek. He is meeting with renowned skeptics of the free market and revealing an “Institute for New Economic Thinking.” Part of his mission is to fix the failures created by decades of deregulation. . . Of course this is being funded by a man who invests, and operates, most of his business outside the United States of America to avoid many of our inconvenient regulations. Not to mention that Soros, the billionaire, accumulated his fortune through the capitalist, free market, system he now wages war against.
A quick investigation into the business practices of one of the Left’s most influential billionaires results in a number of incongruent actions and statements. Most glaring is his business, Quantum Fund, which came to be worth well over $10 billion by utilizing the relatively free market of currency speculation. In short, it is a hedge fund company. By short selling and speculating in a free market, Soros amassed his wealth. In addition to substantially profiting from the money to be made in the free market, Soros has previously stated he acts like a true capitalist. In an interview with 60 minutes he declared “I am basically in [the business] to make money. I cannot and do not look at the social consequences of what I do.” And yet, here he is pouring $50 million into an effort to delegitimize the concept of a free and open market.
Part of the group’s justification for insisting on such an overhaul of economic understanding is the alleged “de-regulation” that contributed to the current economic crises. But the argument is both self serving and borders on fictitious. Certain government acts, such as the Community Reinvestment Act of 1977 and the Fair Housing Act of 1968 were utilized (more so in the last decade and a half) to force financial institutions to approve loans to customers with less than prime credit. Banks were not only encouraged by the government to make loans to clients with subprime credit history, but they were required to. And it didn’t stop there. Government intervention and micromanagement of the industry was encouraged by a number of Washington elites. As recently as 2007, Barney Frank suggested that Freddie Mac and Fannie Mae’s subprime loan portfolios should substantially increased. Furthermore, when the Republicans attempted to push legislation that limited the number and increased oversight of subprime loans, Congress denied the motion. In short, the economic crises was not the result of deregulation, but the inevitable consequence of government involving themselves in financial policy rather than allowing the private sector to operate in their best interest. The words of Milton Friedman should be remembered: “Many people want the government to protect the consumer. A much more urgent problem is to protect the consumer from the government.”
After all, what possible benefit would an institution reap from offering a large percentage of subprime loans in an open and free market? Very little. (In fact, they weren't doing it very often until the government told them they had to.) The return of a long term solid loan is greatly more profitable than the short term gain of selling off subprime mortgages. Additionally, even if greed was a major motivation in the actions of the financial institutions, the government’s encouragement of such an activity should not be overlooked. The “too big to fail” notion is merely chum in the water for other institutions that dabble in potentially unstable markets. When a business as big as one of the top banks goes under, money is not simply lost. Other corporations, namely the healthy ones, would be eager to buy up the assets and thereby strengthen the economy. The failure of a large corporation opens the doors for more competitors and even smaller businesses to fill the void.
Even the French, once upon a time, understood the concept of free markets better than the intellectual elites Soros is seeking to employ in his institute. In 1680, French business men were asked by their government what they needed in order to help the economically challenged country succeed. The business men’s response? “Laissez nous faire.”
But there seems to be a disturbing trend in Washington. Many elites believe the economy is too stupid and ineffective to simply be left to its own devices. “Solutions” are presented by Washington, and the likes of George Soros, that usually only accumulate power and centralize government rather than fix the problems presented by their last “solution.” Throughout history the expansion of government has failed to produce anything short of misery for the average citizen or subject. The fundamental concept behind capitalism and the free market system is that Liberty is not designed to be rationed to the “worthy” or regulated out of its existence. Rather, failure breeds success and Liberty induces innovation. To reap the rewards of business is the goal of every working family, regardless of income bracket. George Soros certainly understands the drive for money; but he has already made his fortune. Shouldn’t someone ask why he wants to dismantle the very system that afforded him the opportunity to find affluence?
Milton Friedman also once said “Underlying most arguments against the free market is a lack of belief in freedom itself.”
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