Going too far

The worst part of the recent financial meltdown and market crash is that it will fuel a new round of pundits claiming this as the proof that free markets don’t work.

Rather than pointing to a better solution with facts and data they will simply say this is proof that we need govt regulation.

See this month’s vanity fair story ‘the economy’ by joseph stilglitz. He states, “a unique combination of ideology, special interest pressure, poplulist politics…sheer incompetence has brought us to our present condition.”

And that ‘the new populist rhetoric of the right – persuading taxpayers that ordinary people know how to spend money better than the govt does’

And…’Economic theory – and historical experience – proved long ago the need for regulation of financial markets.’

Am I missing something? If ‘economic theory’ proved this, maybe mr stilglitz would be kind enough to clue us in with actual references. I was under the impression that economic theory proved that free markets were the long term solution with small doses of regulation to maintain a fair and level playing field for all participants.

He goes on to say that if we would just tax the rich more would ‘would provide better incentives where they count and would provide more revenue and lower deficits’. Does he mean better incentives to earn less money?

so this guy basically believes that socialism is a better system. Let’s see. The govt is better at spending our money. Financial markets should be regulated. And we should incent people to be equally poor.

And he says ‘throwing the poor out their homes because they can’t pay their mortgages is not only tragic; its pointless’. Now who is going for the populist brain dead rhetoric? So all our problems were create by a small number of greedy wall street execs. All those people buying homes with no money down or borrowing against their equity to buy new cars. They weren’t robbing peter to pay paul? They were just poor innocent victims? They shouldn’t have known better? Why is it the lender’s fault for giving the money? Nobody forced these people to borrow up their eyeballs.

It always seem to be the ultra liberals, especially socialists who treat ‘the people’ like they are naïve children. We can’t expect these poor souls to realize they can’t afford to borrow money. The govt’s job is to protect us from our poor selves. Don’t let us drive too fast or smoke or borrow too much.

We all saw this coming for a few yrs. Why didn’t the govt complain while this was going on? Why wait until it all blows up to say there should have been more regulation?

3 thoughts on “Going too far

  1. You shall see your “pundits” arguing your point at http://www.templeton.org/market/ where Bhagwati, Bernard-Henri Levi, Reich and others try to answer the question, “Does the free market corrode moral character?” Take a look . . .
    xoxo my bro.
    Laura

  2. 1) Why does the onus of the blame fall on the financial fatcats? Because the Lehman exec should be financially disciplined enough to allocate their risk better than the financially undisciplined sub-prime borrower. How do we know the sub-prime borrower is financially undisciplined? Because otherwise they wouldn’t be a “sub-prime” borrower.
    2) The government definitely has a role to play in the economy, and I’m not sure it’s quite so absurd that Stiglitz would suggest it. It’s the government’s place to put a floor in to create investor confidence when there is none. It’s the government’s job to make a level playing field so that business can flourish because people are playing by a set of rules that is considered “fair.” And it’s government’s job to make sure the house of cards doesn’t crumble. (If the bank doesn’t have money, it’s up to the government and the American people to prop up those banks because without those banks, our economy crumbles.) The Great Depression is evidence enough that good government policy plays a role when the free markets malfunction.

  3. “Am I missing something? If ‘economic theory’ proved this, maybe mr stilglitz would be kind enough to clue us in with actual references. I was under the impression that economic theory proved that free markets were the long term solution with small doses of regulation to maintain a fair and level playing field for all participants.”
    If the capitalist system did not derive most of its benefits from areas where it cuts corners and abuses human rights, you might be on to something. Why do you think companies have left the USA in droves? They didn’t go because they could do a better job with human rights in other countries…they fled to places that the cost of living is less than $1/day, have zero environmental and labor protections, allow child labor and are otherwise highly irresponsible. Something we put up with in this country until we fought, bled and died in order just to be allowed to say ‘no’ to that treatment from businesses. That’s history, that’s why this guy said this kind of thing. Let a capitalist off the leash, they begin to abuse people eventually. It’s where the profit is. That’s the economic theory he’s probably referring to.

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