Velshi Gives Viewers Harsh Dose of Reality on Economic Policy
Thereâ€™s no such thing as a free lunch. The governmentâ€™s continued bailouts for the private sector risk losing the â€śfreeâ€ť part of the free market system, according to CNN Chief Business Correspondent Ali Velshi.
The cost of a second bailout for Citigroup (NYSE:C), in which the government would absorb up to $277 billion in bad assets, could eliminate the companyâ€™s ability to operate in a â€śfreeâ€ť market economy, Velshi said on CNNâ€™s â€śNo Bias. No Bullâ€ť segment Nov. 24.
â€śRemember, this is still the free market, so companies have to have some freedom to be able to change how they deploy the money,â€ť Velshi said. â€śCitigroup didnâ€™t deploy it well in the first place, so this is the struggle that we got â€“ do we go into an entirely controlled economy because we want to dictate how that money goes?â€ť
What happens under that scenario? According Velshi, giving the government a say in the private sectorâ€™s business decisions is a policy that would fundamentally alter the entire premise of the free market.
â€śThat might be the solution, but itâ€™s going to be a bitter pill for people to swallow,â€ť Velshi said. â€śThatâ€™s the decision these guys have to make â€“ do they stimulate the free-market economy or do they start directing it?â€ť
Another economic policy proposal Velshi addressed was the notion the government can magically create a â€śgreenâ€ť economy, as President-elect Barack Obama has proposed. He told viewers a government stimulus meant to build a green economy would have to be implemented in combination with tangible things that are in demand.
â€śYou canâ€™t build a fake economy,â€ť Velshi said, echoing something Cato Instituteâ€™s Daniel Mitchell, a Business & Media Institute advisor said to him just the day before on CNNâ€™s â€śYour $$$$$.â€ť On Nov. 23, Velshi took Mitchell to task for stating that there was too much regulation of the financial markets. But on the â€śgreenâ€ť economy, Valshi had apparently listened to Mitchell.
â€śIf thereâ€™s work to be done and you can provide that work â€“ Barack Obama has talked about a green economy and alternative energy,â€ť Velshi said on â€śNo Bias. No Bull.â€ť â€śSo, if you combine work that does need to be done â€“ like our electrical grid, which does need to be fixed, and we have roads and bridges, with incentives for business to create jobs for this new economy â€“ you can actually do something with this.â€ť
â€śBut fundamentally, everybody who has lost a manufacturing job in this country in the last four years has this much chance [zero] of getting it back,â€ť Velshi added. â€śIt is not coming back, so you can perhaps dull some of this pain for a few years with some federal investment, but in the end we are going into a different economy and this team is going to have to come up with a solution for that as well.â€ť