The creep of big government into the economy never really ceases to amaze me.
After all, since the Progressive movement in the early part of the 20th century, those who see the government as the primary tool for shaping society have embarked on a slow, steady campaign to essentially get government’s tentacles into just about every aspect of human life.
That campaign continues to this very day. And I just saw yet another glimpse of what the future might hold.
Former U.S. Treasury Secretary Lawrence Summers is floating the latest trial balloon. As reported in an article at Bloomberg:
Summers floated the idea of continuous purchases of stocks as a potential ingredient in a recipe for the developed world to strengthen economies struggling with subdued growth and inflation.
So, Summers wants us all to get familiar with the idea that our tax dollars should go to government officials … so that those government officials can put those dollars to work and help prop up stocks in the Dow and S&P 500.
I would be laughing if I weren’t about to cry.
I’m very much a proponent of free markets, free minds and the free choice of individuals to do what they want with their hard-earned money. So, I find the idea of government intrusion into the stock market via direct purchase a repugnant overreach.
Summers made these remarks during a lecture at a Bank of Japan conference in Tokyo Friday. While he did say he wasn’t yet ready to make a policy recommendation of this sort just yet, consider this. The mere fact that a former Treasury Secretary and economic adviser to presidents would speak of such an intervention tells you all you need to know about how most big-government types see the world.
During his lecture, Summers raised concerns about “secular stagnation.” That’s where trend economic growth rates have been reduced and neutral interest rates are lower than historic norms. As reported in Bloomberg:
To the extent that low neutral rates are in part the consequence of investors preferring fixed-income assets and steering clear of riskier options, policy-makers can combat that by buying risk assets, he said.
There you have it. Policy-makers will now be tasked with picking winners and losers in the markets via buying risk assets.
Now to be fair to Summers here, he isn’t the first government-type to suggest such an intervention. The Bank of Japan already has a policy of buying assets directly, as the government there “invests” taxpayer dollars via buying Japanese equity funds.
Interestingly, even Summers himself knows this big-government trial balloon represents what every thinking person knows it really is … a form of socialism.
Once again, per the Bloomberg piece:
“There are obviously important political and economic questions associated with government ownership of companies,” Summers noted. Some critics could term such a policy as “socialism,” he said, while others could highlight that governments already buy stocks in other ways, such as in the U.S. for federal employee pension funds.
Sorry Mr. Summers, you don’t have to be a “critic” of this kind of lunacy to call a spade a spade.
Sadly, given the creep of big government over the decades, I wouldn’t be at all surprised if this bad theoretical concept someday becomes just accepted economic policy.
That’s what’s happened with quantitative easing. So hey, why not take the intervention one step further?
That’s the history of Progressive policy creep. And the only solution I see is to alert smart people like you to its existence … and its destructiveness.
This article is brought to you courtesy of Uncommon Wisdom Daily.