Economist Steven Horwitz explains very clearly in "An Open Letter to my Friends on the Left" that too much government -- and specifically too much collusion between business and government -- caused the mortgage problems, rather than too little government:
"I know, my friends, that you are concerned about corporate power. So am I. So are many of my free-market economist colleagues. We simply believe, and we think history is on our side, that the best check against corporate power is the competitve marketplace and the power of the consumer dollar (framed, of course, by legal prohibitions on force and fraud). Competition plays mean, nasty corporations off against each other in a contest to serve us. Yes, they still have power, but its negative effects are lessened. It is when corporations can use the state to rig the rules in their favor that the negative effects of their power become magnified, precisely because it has the force of the state behind it. The current mess shows this as well as anything ever has, once you realize just what a large role the state played. If you really want to reduce the power of corporations, don't give them access to the state by expanding the state's regulatory powers. That's precisely what they want, as the current battle over the $700 billion booty amply demonstrates."
It's a terrific essay. Please read the whole thing here.
2 comments:
The free market had it way for the past eight year and now they want to blame government for its failure to exercise oversight.
Free marketeers cannot find in capitalism where it anywhere addresses the value of justice. Capitalism depends on free handouts (land, government handouts, tax credits, "economic incentives" aka corporate welfare) to be a success. Capitalism fluctuates between boon and bust cycles.
There's no justice (e.g., proportionality) to control capitalism.
Capitalists are always on the take for a free government handout.
I think you are confusing capitalists with the brand of business person spawned by the worst of the mixed economy.
Oversight -- or a lack thereof -- has nothing to do with it. Bad loans on top of bad policies caused the problem. The overseers were there pouring gasoline on the flames. A free market with free market consequences would have prevented this mess, but everyone knew the taxpayers would mop up the mess.
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