The virtue of gambling

amit October 5th, 2008

At a time like this, when there is a financial crisis, Wall Street is reeling, and some risky investments have turned sour, the LEFT is on a march to save America from the marauding capitalists. In the words of Nancy Pelosi,”… failed economic policies — policies built on budgetary recklessness, on an anything-goes mentality, with no regulation, no supervision, and no discipline in the system”. The LEFT wants to supervise, to instill discipline in the market, and to enact regulation to save us. They want to save us from “gambling” with our future.

Here is the problem with the LEFT saving us. Investment is the only path to growth, return on all investments happens in the future, future is uncertain, uncertainty is risk. Thus by definition reducing risk implies reducing investment which in turn implies curtailing growth. One could question where is the harm in slow growth or even just sustaining our current living standard. What is the rush they say?

To one who has more than a million in the bank, owns a mansion, and has a BMW to drive, perhaps little investment-low growth is fine. It does not open the door to the American dream for the rest of us. Give us the choice to take our own risk and reap our own rewards. Let the invisible hand of Adam Smith discipline our behavior, don’t curtail us by policy. But what about the society at large the LEFT asks?

Well, the society at large does better. If the investor succeeds his wealth is not only taxed, it fuels further growth by creating more jobs and pulling others along. If the investor fails he does so at his own peril; the society does little to save the investor. The LEFT says that’s trickledown economics, and according to them it does not work. So what is their alternative for the society at large I ask?

Their solution is income redistribution through bigger government. If we cannot grow, the only way we can help those who are behind is by taking from those who are ahead. They boldly promise us a few thousand dollars in tax cuts; and they promise government plans to solve all our problems. They are offering us a DMV healthcare, a DMV education, and a DMV retirement in exchange of our chance at the American dream.

You know what, I’d much rather play my own hand.

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