Credit Crisis & Extra Credit Palin
By John Tillman, CEO
My liberal friends have been chortling throughout this
current crisis. “What do you say about free markets now, John?” is the usual
course, they miss the point entirely. No one has changed human nature.
Each of us in our own lives tries to do the
best we can within the rules of the game and within our own moral code.
Some things may be within the rules of the
game, but you may choose not to fully exploit some opportunities.
Others will. We all do our best, and we make mistakes. That’s life.
Markets are no different. But let’s be clear for my liberal friends, and some libertarians—free
markets do not mean anarchy. After all,
the Declaration of Independence explicitly says in order to “secure these rights...governments
are instituted among men.” Governments
are instituted, and they define the rules of the game. Sometimes the rules work really well. Yet, on
occasion, the rules become onerous or create incentives that allow natural
human behavior to run unchecked and harm others. Not good.
Men (and women) are not perfect, and the rules of the game
instituted by political actors are sometimes faulty. And herein lies the root of the credit
crisis—it is not free markets that went awry. The rules of the game governing Fannie and Freddie, the Community
Reinvestment Act and loose money policies of the Fed created the credit bubble
in the first place. There are other
factors, of course, but this is a root of the problem. Then you mix in the mark-to-market accounting
rules, and you soon have a toxic stew whose stench is now permeating LaSalle
Street, Wall Street and Main Street.
Almost every market failure or dislocation can trace its
root cause to bad public policy. The
challenge today is to get the fix right and remember it is not markets that
failed, it is the rules of the game “instituted among men” that failed.
Extra Credit Sarah Palin
Sarah Palin has a much different challenge tonight than Joe
Biden. She must get all the extra credit
questions right (Question from Gwen Ifill: “Given the current financial crisis,
do you think the U.S. should revisit the Bretton Woods agreement?”) as well as
demonstrate leadership, judgment and capacity to govern.
Biden simply has to avoid talking too much or commit another
gaffe (“Gwen, thanks for giving me an advance copy of your new book on the Age
of Obama and yes, I’d be happy to write the introduction.”). It will be assumed he does not need to be
quizzed on knowledge questions while Palin will be.
Watch the questioning tonight and see how many questions are
fact and knowledge-based as opposed to leadership and judgment-based. Regardless of your views on Palin, the true
test of a leader is not their fact-based knowledge going into a job, though
there must be a baseline reservoir, of course, but rather the key is
leadership, judgment and ability to absorb new information rapidly and make the
right calls case by case (yet within the parameters of an overall strategic
Of most interest to me is observing what happens when
judgment intersects with leadership. Presidents Clinton and Bush were both out front on the risks of
loosening the rules of the game on Fannie and Freddie. They had the right judgment, but neither was
able to lead and put in better rules.
Certain members of Congress (Frank, Dodd, Schumer, et al.)
had the wrong judgment but successfully led and prevented the corrective
measures that would have avoided or mitigated the current debacle.
Keep this in mind as you think about who can lead when that
leadership and judgment is focused upon doing what is right, even if it is
unpopular. Who is more likely to have
the backbone necessary, whether in a vice president or president? Who will be willing to stand against the
tide? These same principles will
matter to us in Illinois after November when the entire state begins to focus
Questions? Comments? Like to get involved? E-mail John Tillman at email@example.com.
By Kate Campaigne, Director of Transparency Policy
I am pleased to announce the launch of our new OpenIllinois.org (http://www.openillinois.org) website,
which highlights transparency in government efforts occurring
throughout the state of Illinois and brings attention to the crucial
need for comprehensive transparency in all levels of Illinois
you can also find stories about our Liberty Leaders’ worthy efforts,
transparency pledge, and read about our partners who support
transparency in government, like For the Good of Illinois, AFP, ATR and
NTU. Led by the stellar efforts of hard-working Liberty Leaders, we
have the goal of one day seeing a fully transparent Illinois.
we move further towards an open Illinois, we’ll map our successes on
the site. Please visit Open Illinois, and we’ll be making
improvements as we progress towards a more liberty-based Illinois.
The Goose Is Dead
By Greg Blankenship, President
Last time we
told you how the governor’s budget power play had caused a fracas over the
closing of government-funded parks and historic sites. Since then, the
legislature has come to the rescue, almost on cue, by discovering the $200
million needed to overturn the governor's veto.
beware: Just because the spending is appropriated doesn't mean the governor
won't play more games with these funds.
In other budget news, there is a new hole in the budget according to the
Commission on Forecasting and Government Accountability. This new hole
amounts to $121 million, resulting from declining riverboat casino revenue.
Opponents of the statewide smoking ban blame it as one of the chief
causes. Here we see another example of how over-regulation harms businesses.
“The road to
hell is paved with good intentions…” and all of that.
A lot has been done over the years to punish this industry. And, because the
state licenses it, the legislature and governor simply see it as a goose that
lays golden eggs. The
problem is three-fold: a 50% tax on gross revenues -- not profits --
for the most lucrative casinos; an additional 3% tax on casinos that
to horse racers; and the smoking ban. Put them all together, and, lo
and behold, the goose is dead...and it isn't laying golden eggs any
Ronald Reagan described it best by saying, “The government’s view of the
economy could be summed up in a few short phrases: If it moves, tax it. If it
keeps moving, regulate it. And if it stops moving, subsidize it.” The
casino industry in Illinois has stopped moving, and politicians
aren't getting other people's money to spend on their friend’s pet projects.
At least for the time being.
Makes one wonder
what they'll tax next.