American Onslaught
Porn and the Bailout | Jan 08th 2009
I don’t know how many of you have caught this, but for those of you who do not know two of America’s top pornography companies (I like the term the big two) are calling for a bailout. Now I know what you are going to say, or at least think.
Sure one can say what business do they have asking the US Taxpayer for money, and I’m sure there are plenty of jokes we all can think of. But step back for a minute. This is serious and we as Americans should take heed to what Larry Flynt and Joe Francis are getting at.
Certainly they do not intent this to be a serious thing. They themselves have almost hinted at the fact this is just another stab at the ridiculous nature of the US Treasury and the US economic policy when it comes to bailouts.
“The take here is that everyone and their mother want to be bailed out from the banks to the big three,” said Owen Moogan, spokesman for Larry Flynt. “The porn industry has been hurt by the downturn like everyone else and they are going to ask for the $5 billion. Is it the most serious thing in the world? Is it going to make the lives of Americans better if it happens? It is not for them to determine.”
Never the less they are asking for $5 billion dollars. Still, the point is take. When you start down this road of bailing out everyone, you cannot say no.
That said, everyone knows or should know the legislature and the treasury will say no. But what message does that send. Only companies and industries with political clout and a mobster-style union to back can get billions in public, taxpayer money.
Now I am not an advocate of bailouts, and never have been. I have been opposed to these bailouts when they were first suggested. To me, the free market only works if it is free. Free to prosper, free to fail. When you start handing out blank checks to a company, an industry, where does it stop.
We as the American people, the American taxpayers, will not foot the bill for the poor business decisions of companies. That is what makes industries lean, mean, and profitable. Companies come, and companies go. Those that fail get swallowed up while at the same time making room for the newest and the latest.
In the banking industry before our elected representatives (all of whom regardless of party affiliation bear responsablity) signed over $350 billion with nsa, things were working. The FDIC was facilitating bank takeovers of those failing, the industry was getting consolidated by mergers, and things were getting on the road to recover. It was working without the money. And it would have continued to work.
History, with respects to government intervention, has show us that this course tends to only make things worse. Or at the very least, prolonged. We may never know for sure. But we cannot be scared of the way free markets work, they are cyclical. After all, we never waver when they make profit rain down from the sky.
Larry Flynt should be applauded for making the point, in his own mischievous way. But he shouldn’t be given the $5 billion even still.
7 Comments »
I agree with your logic, as far as it goes. But would you really refuse to give $100 of your own money to a failing business if it effectively cost you $10,000 over the next ten years? That’s what we’re talking about with the bailouts. Ideologically no one wants to prop up failing industries, but practically, we may want to. The impact of giving or not giving bailouts is the real issue, and you’re not bringing any arguments to bear on it. Let’s see a post that does so.
Comment by Jerry Gyant — January 8, 2009 @ 7:03 am
[...] Cutter Mitchell over at Entrepreneurial Insights gets kudos for coming up with the most entertaining reference to this bailout to date. Since porn [...]
Pingback by The Zach Bell Show » Blog Archive » Subsidized Sex And Security UPDATED — January 8, 2009 @ 3:39 pm
“The big two” Oh boy did that have me in stitches.
I have to take issue with you though when you lump free markets and the banking industry into one legitimate pile. Central Banks retain a kind of odd monopoly on the market of currencies and frankly, there is no free market in the world of currency so the other markets (which would certainly be better off if they were ultimately free) are predictably damaged in their ability to operate for the benefit of consumers and entrepreneurs.
My errant and worthless opinion on the matter anyway.
Comment by Zach Bell — January 8, 2009 @ 3:44 pm
@Zach while I do agree, in part, that the banks may not be as free market as say the auto industry, but you cannot deny they are ruled by the very same free market principles. One has to let those free market principles shine through, and not muddy the waters with intervention.
Comment by cuttermitchell — January 8, 2009 @ 4:00 pm
I would certainly readily deny that central banks are governed by free market principles. Though I sincerely doubt it, for the sake of argument, I’ll concede that central banks operate in an effort to supply liquidity to a market.
I can’t get away from two factoids though. Government currency is the only legal tender in any one nation. That’s kinda anti-free market in and of itself. The second factoid is that the Central Bank in any given nation controls the money supply all on its own and constantly devalues the currency. If I work for an hour today, I’ll make about $20. If I stuff that $20 under the mattress for 50 years, it’ll be worth half as much but the labour I worked that day to earn that $20 didn’t change in value. It was worked and paid for as a determined set value…I kinda feel like I was robbed.
On the same token, if I take my money and buy land or another tangible asset, my money will retain its value. To me, this demonstrates the worthlessness of fiat money.
Since the government enshrines a monopoly on currency under law, it is a defiance of the free market economy and central banks serve to damage the free market economy because they introduce a constantly devalued currency upon which we expect that economy work. It’s a ridiculous notion.
Private currencies are the only solution to central banks and their devalued currency. I believe private currencies would be far more stable than nationalized currencies we see today all over the world.
Comment by Zach Bell — January 8, 2009 @ 4:12 pm
@Zach: I think you are missing the point. All of what you have said would be true, if there was only one bank, they were forced to do business only in the united state, or the bank itself was centralized. If this was the case you would have a situation like Iceland. But they are not this way. Banks are free to incorporate and start taking in deposits, once approved by the fed, at any time. They are also free to trade currencies, branch out into other services ranging from mortgage lending to financial planning. And many of these banks that were helped out had a range of this diversification.
While we may have to agree to disagree on this point, you have to acknowledge that currency is one of many business operations of banks. So you are right they may not be the freest market out there, but they are far from being a US Mail Service or Cable Companies that are true monopolies approved and controlled by the government.
Comment by cuttermitchell — January 8, 2009 @ 4:29 pm
But banks trade only in nationalized currency. There is no legally recognized Virginia note or Wal-Mart Dollar that can be spent as a true currency. Currencies have been terribly restricted to federal nationalized currencies only and no other note is recognized as legal tender that can be used to enforce the terms of a contract of any sort.
Banks can certainly take in deposits at any time they wish and are allowed to practise fractional reserve banking on fiat currencies as restricted by central banks. An independent bank can not however take a deposit in the form of a private currency because private currencies have effectively been outlawed.
I think I can easily agree to disagree with you Cutter.
I can’t ignore that even if we did have free markets, we don’t have a free money supply upon which we can expect those markets to survive.
Comment by Zach Bell — January 8, 2009 @ 5:22 pm