Failure is No Longer an Option

Larry Kudlow writes a good piece at The Corner on the subject of failure and the government's allergy to it:

Why does it seem to me that all Washington ever seems to talk about these days is bailouts? Bailout Freddie Mac. Bailout Fannie Mae. Bailout Wall Street. Bailout homeowners. Is it possible in America today that no one is allowed to fail?

You know, Phil Gramm was right. We are a nation of whiners. No one wants to believe that failure is an option anymore. Whatever happened to personal responsibility? Or learning from your mistakes? Or going through transformative difficulties that just might change your life and your behavior? But it seems like failure is off the board nowadays and that it’s government’s job to rescue everybody.

Whatever happened to the philosophy of Friedrich Hayek, the great free-market economist and Nobel Prize winner, who said the great thing about capitalism is the freedom to succeed beyond your wildest dreams, but that there is also the freedom to fail? I believe Hayek once argued that if he had to choose between success and failure, failure is more important in terms of preserving the free-market system.

Of course, the great thing about America is that you can fail many times, pick yourself up, keep on trying, and then succeed beyond your wildest dreams. But this whole process is being subverted by the political attitude that no one must ever be allowed to fail. I don’t like it. It’s socialism, isn’t it? Perhaps it’s big-government socialism. Or maybe it’s corporate socialism. Or maybe (with Fan and Fred) it’s Republican socialism.

No, I guess it’s really bipartisan socialism.

And you know what? There may be other bailouts. Look at General Motors, a complete basket case. They’re now trying to come up with a new hybrid-type car, but so far no one is buying. Given their bankruptcy, my friend Holman Jenkins of the Wall Street Journal worries that government subsidies in the name of global warming will lead to a government bailout of GM.

And what about the bankrupt airlines? Is government gonna bail them out too?

So I guess I was relieved to come across a passage from President Bush’s press conference last Tuesday. A reporter asked him about bailing out banks and mortgage markets, and wondered about other entities in the economy that might be crucial, like General Motors. And President Bush said, “If your question is, ‘Should the government bailout private enterprise?’ the answer is no, it shouldn’t.” POTUS went on to say, in terms of private enterprise, that no, he doesn’t think the government ought to be involved with bailing out companies.

Whew.

Some businesses ought to fail, and some homeowner's should pay the price of overextending themselves and buying homes they knew they couldn't afford with loans that were eventually going to doom them. Failure has a way of weeding out problems and will over time make the economy stronger. We've become so allergic to the idea that somebody might be inconvenienced that we're creating a situation in which we reward bad decisions and encourage unnecessary risk. That's a recipe for the failure of the whole system.