Reply #11: The invisible hand has been panhandling again...

[rfranklin]

Capitalism Comes in Two Parts - Profit & Loss

by Jon Faulkner | August 3, 2008 - 2:58pm


Republicans have preached about the Magical Free Market for so long they’re starting to believe it is magical - that profit comes automatically, as long as the government, with its suffocating rules and regulations, stays out of things. Conservatives seem to have forgotten there’s another side of profit, and that is loss. If profit is the soul of capitalism, then risk is its heart. Americans can have respect and admiration for a man who is willing to believe in his own ideas, and is willing to put his last nickel on the line because he believes in himself. Such a man is saying, in a fundamental way, here is my fortune. I’m willing to risk it, and by extension, the well being of my family and friends, and my reputation as an intelligent, discerning person, that I might profit from my idea. Without risk, there is no point in profit. What is there to admire about a man who puts a few dollars into this or that enterprise knowing it will be returned to him no matter the circumstances, no matter the inherent danger? Capitalism without risk is defined fascism.

Consider the republican response to the collapse of the Housing Industry. Taxpayers, only a few months ago, lent J.P. Morgan $30 billion to bail out the fifth largest investment house in the nation, Bear Stearns. The loan was a sweetheart deal. The interest was 2.5% - hardly a rate that’s available to a majority of Americans. If the deal goes sour, and J.P. Morgan is unable to recoup any of Bear Stearn’s losses, J.P. would only be responsible for the first billion of the $30 billion dollar loan. American taxpayers would bear the rest of the burden. They are being asked to accept most of the risk for their loan of $30 billion dollars, while J.P. Morgan gets the profit. Nice work. If you can get it.

--more--

http://www.smirkingchimp.com/thread/16269