In this must watch video, British MEP Daniel Hannan addresses the Oxford Union as part of its debate on the Occupy Wall Street movement. The act of bailing out the banks with the taxpayer’s money, he says, will one day be viewed as a generational crime. The Occupy movement was correct in that something had gone horribly wrong, but completely missed the mark when it came to identifying what the root causes actually were. Hannan sets about correcting the three primary misconceptions held by the Occupy movement:
- The crisis of 2008 was not a failure of capitalism. Using taxpayer money to bail out failed businesses has nothing to with the system of capitalism. Letting failed businesses go bankrupt, and having their assets sold to more efficient operators, while bondholders suffer the losses, is capitalism. This is the complete opposite of what happened in 2008. Under no circumstances do taxpayers suffer the losses of a business in a capitalist system.
- More regulation isn’t the cure. The massive existing regulations serve only to eliminate small and medium sized competition from the marketplace. What’s left is a series of politically connected zombies banks whose existence only impoverishes taxpayers. There is no such thing as too big to fail in a properly functioning marketplace, as healthy competitors are present to quickly fill the void. In the current system, only the largest entrenched players are able to handle the regulatory overhead. Competition is effectively priced out of the market by too much regulation.
- Greed is not a product of capitalism. The desire for material things is hardwired into the human psyche. The free market system is the only one that utilizes this basic instinct for the greater social good. In other words, if you desire to become richer, you must do so by providing a product or service that is utilized by others through voluntary exchange. This can only take place when both parties feel they are leaving the transaction better off. In any other system, the process of becoming wealthier involves ingratiating oneself to those in power instead of becoming a valued producer.
In closing, he says that the Occupy movement failed to identify those who were truly responsible. Instead of targeting what it deemed to be a failure of capitalism, it should have been occupying the central banks that were printing the money used to keep the banks alive and the homes of the politicians that voted for the bailouts. These were the underlying forces that failed capitalism and not the other way around.