Tags: Rasmussen | Government | business | investor

Scott Rasmussen: Government Has No Place In Business

Friday, 10 Aug 2012 10:28 AM

The U.S. government has no place meddling in the private sector, and poll results prove it, said Scott Rasmussen, founder and president of Rasmussen Reports, a polling firm.

Take Solyndra, the failed alternative-energy firm that cost taxpayers about a half-billion dollars.

Just 16 percent of voters believe it was a good idea for the government to provide Solyndra with loan guarantees, while only 27 percent believe it's ever appropriate for the government to make investments in private companies, Rasmussen wrote in a Rasmussen Reports commentary, citing past poll results.

Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

"People tend to view government as a lousy investor. Seventy-one percent believe that private-sector companies and investors are better than government officials at determining the long-term benefits and potential of new technologies. Only 11 percent believe government officials have a better eye for future value," Rasmussen wrote.

"If the government provides funding for a project that private investors refuse to back, 64 percent believe the government money will be wasted."

Not only do Americans tend to view the private sector as more efficient, they also see the sector as more transparent.

Sixty-six percent of voters believe most government contracts are given to the company with the most political connections rather than the one that can provide the best service for the best price, Rasmussen pointed out.

"Americans believe crony capitalism is a reality regardless of which party is in the White House. This is the root cause of much of the frustration sweeping the nation today," Rasmussen wrote, pointing out that governments can't throw taxpayer money at different projects hoping that one will shine and offset others that fail.

"Voters don't want to be selecting a venture capitalist in chief; they want to pick someone to run the government. And they want the government to stop picking winners and losers in the business world."

Government intervention in the economy has taken center stage in recent years, with the Obama administration spending heavily on fiscal stimulus programs and the Federal Reserve pumping liquidity into the economy to prop it up.

New laws, such as the president's healthcare-overhaul law and the Dodd-Frank financial-reform law, are also changing the government's role in the economy.

Some experts say the country needs smarter regulations and not more, including Bill Isaac, former chairman of the Federal Deposit Insurance Corp. and Chairman of Fifth-Third Bancorp.

The Dodd-Frank law, for example, gives regulators greater say-so on bank capital requirements, liquidity levels and risk-management practices and would also ban banks from trading their own money for profit in capital markets.

The problem, according to Isaac, is that such regulations can't prevent banks from engaging in reckless behavior.

A much simpler alternative would be to require big banks to issue long-term senior and subordinated debt on a regular basis.

If banks engage in risky behavior, then the interest rate on their debt would go up.

"That will force them to go into the marketplace and justify to very sophisticated debt investors who have nothing to gain from the risks these banks are taking, they just want their money back with interest, they will have to go into the marketplace on a regular basis and convince these people that they’re doing the right things with the bank," Isaac told Newsmax.TV in a recent interview.

"If a large bank fails, or a small bank for that matter, those debt holders should be required to take a haircut or a loss when the bank fails. Then we’ll have some really marketplace discipline over these institutions and we’ll have less of the wild and speculative practices that we’ve seen in the past."

Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

© 2017 Newsmax Finance. All rights reserved.

1Like our page
2Share
623
2012-28-10
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved