"The high office of President has been used to foment a plot to destroy the American's freedom, and before I leave office I must inform the citizen of his plight. "

– John Fitzgerald Kennedy, Columbia University, 10 days before his assassination

Government Guarantees

Government guarantees are a horrible thing.  Retched in their abuse.  Rampant in their favor.   

Businesses risk their money on producing a product they hope customers will purchase.  But it becomes fascism when a business goes to the CONgress asking for a payback on their contributions to the CONgressmen.  The payback is in the form of government guarantees on their product’s success. 

How can the government guarantee a products success?  Easy, they guarantee the product will meet some minimum “sale.”  If it does not, the government robs you through taxation, to hand the money over to the corrupt businessmen who gratefully kick back some of the loot to the Congressman, in the form of a payoff referred to as a political contribution. 

Guarantees are everywhere.  Crop guarantees.  Bank deposit guarantees.  Loan guarantees.   

Besides costing taxpayer’s money, these guarantees are destructive.  When businessmen weighs the risks of investing their time and money on the development of a product, or loaning money to produce or acquire a product, they perform a risk assessment.  Actually, we all do.  We make the best guess as to our likely return and the likely risks of everything we do.   

When government guarantees these risks, they are no longer risks.  And as a result, bad loans, investments and planning occurs, because making such plans is guaranteed to be profitable for the “risk” takers, without any risk (except to the taxpayer, who reaps NONE of the benefits of ultimately having their capital risked).    Without their property at risk, the potential of investing or loaning  is not a consideration, and bad loans, bad investments, bad planning ensues, because there are no penalties to the people doing the activity, only to the taxpayer. 

A worse phenomenon, is that government will often use the guarantee as an excuse to insert itself into the regulation of that area of business (‘we do not want to risk the taxpayers money after all,’ boasts the CONgressman), and since the business venture  frequently meets with disastrous consequence (i.e., it fails), government steps in to regulate the whole industry (it cannot stand the competition), or over time government  literally acquires the industry due to defaults (e.g., the airline industry is very close to being wholly nationalized). 

When this happens it is in the government’s interest  to see that competing (to it) businesses fail, so the government monopoly becomes complete.  It does this through increasing regulations, which increase cost to the consumer, and increased risk to the entrepreneur compared to his government “competition.”  

Gosh, there is no longer a private business providing some service, that the government now provides exclusively.  See, where would you be without government?