All Things
Praise be . . . !
Thomas Friedman, a prominent, nationally syndicated commentator chose Easter Sunday for reaffirming his conservative beliefs. One of those beliefs is that government does not make things better. The less government, the better we are of. Especially, government should stay away from the economy and let the free market work its own miracles.
Only a bold person would dare to say such a thing only a week after the government bailed out Bear Stearns, one of the largest US investment banks because it was threatening to go bankrupt. In order to prevent a run on the banks and a worsening of the economic recession, the government spent a large amount of tax money to save the bank – and, of course, its stockholders.
This rescue is only one among many actions the US government has taken in recent months in order to shore up the faltering economy. The government has made millions available to support failing economic institutions such as banks and mortgage companies. Each tax payer will, once the tax return has been filed, receive the royal sum of $ 300.00 or $ 600.00 from Uncle Sam. The cost of that largesse is $40 Billion.
Why is the economy in recession? Some people think that the current problems are the result of insufficient government oversight over financial markets. Having failed to prevent crises caused by excessive speculation, the government is now trying to dampen the effects of their previous failure.
Nor is this the first time that insufficient government supervision of the financial system has created enormous suffering in our country. Before the Great Depression the free market ideology of today's conservatives was widely accepted. The stock market and the banks were free to do anything they wanted. Not surprisingly their speculation brought about the economic collapse of the Great Depression and an unemployment rate of 25% that lasted until the advent of World War II.
Ever since, financial transactions have been supervised by the government and that has saved us from some disasters although, as we can see today, not from all of them.
In our economy individual businesses compete for market share, for instance, by lowering their prices or by making investments that are slightly more risky than those made by competitors. If one competitor takes a risk, everyone has to follow suit or be left behind. Competition pushes every one into cutting corners. Airlines may try to save money on airplane maintenance; the banks may try to get ahead by the betting on riskier investments. If that process is unchecked it is only a question of time before truly unsafe products come to market -- think of the toys contaminated with lead, or dog food that poisons your pet--both imported from China to lower prices.
The government can stop competition from harming consumers, or the entire system, by forbidding certain sorts of risks. It alone can do that by imposing the same rules on every business and thereby putting limits on what competitors can do. Without such limitations the free market will hurt customers and the entire country.
These are not the only examples of government actions approved of even by many conservatives. (There has not been much criticism from conservatives of the Bear Stearns bailout.) When there are floods, tornadoes, and hurricanes, everyone expects the government to help out the victims Many have complained that the government has not done enough to help out the reconstruction of New Orleans. Few, if any, voices assert that we should just leave it to the free market to repair the damage done by a Hurricane Katrina.
Its a fairy-tale that the so-called free market, left to its own devices by the government would provide undreamt of freedom and prosperity for all. Experience contradicts that story; it is an article of religious faith--something believed even though experience decisively contradicts it. There is always room for argument about specific government interventions but to assert point-blank that our economy would be better off if the government kept its hands off, is to completely ignore the experience of the last 80 years. The conservative faith in the free market is just that--a faith, not supported by experience.
Easter Sunday, celebrating the resurrection of Jesus is therefore the best day of the year for reasserting the conservative principles. The story of the Resurrection is not supported by experience. Human beings, once dead, remain dead. Belief in the Resurrection is an act of faith; it goes against all our experience. Christian Churches recognize that.
Would that our conservatives where as honest as the Christian Churches. The belief in the free market similarly contravenes all experience. It, too, is an act of faith. It is time that our conservative commentators came clean and admitted that.
-
More about free markets I have written about the free market mythology before. I have pointed out that in the name of the free market, Congress has forbidden the government to bargain with drug companies over the price of medicines mostly bought...
-
The Free Market We hear daily about the blessings of the free market. But we hear a lot less about its limitations. In practice it is well understood that some things do well if traded in a market. Other things, we believe firmly, should...
-
p { margin-bottom: 0.08in; } Too smart for our own good? Larry Summers has resigned as head of the President's Council of Economic Advisers to return to Harvard as a Professor of Economics. This ends another phase in a very distinguished career...
- What Free Market?
What free market? Congress has finally passed a financial overhaul bill. It has created a number of new bureaucracies and tightened some rules to rein in the greed of bankers and investors. Time will tell whether this new bill will do what it promises...
- Regulating The Markets
Last week, Sen. McCain came out in favor of regulating financial markets. That is a departure from traditional Republican orthodoxy that is truly astonishing. For 100 years or more, Republicans and many Democrats have told us that markets are "self-regulating."...
All Things
Praise Be . . . !
Praise be . . . !
Thomas Friedman, a prominent, nationally syndicated commentator chose Easter Sunday for reaffirming his conservative beliefs. One of those beliefs is that government does not make things better. The less government, the better we are of. Especially, government should stay away from the economy and let the free market work its own miracles.
Only a bold person would dare to say such a thing only a week after the government bailed out Bear Stearns, one of the largest US investment banks because it was threatening to go bankrupt. In order to prevent a run on the banks and a worsening of the economic recession, the government spent a large amount of tax money to save the bank – and, of course, its stockholders.
This rescue is only one among many actions the US government has taken in recent months in order to shore up the faltering economy. The government has made millions available to support failing economic institutions such as banks and mortgage companies. Each tax payer will, once the tax return has been filed, receive the royal sum of $ 300.00 or $ 600.00 from Uncle Sam. The cost of that largesse is $40 Billion.
Why is the economy in recession? Some people think that the current problems are the result of insufficient government oversight over financial markets. Having failed to prevent crises caused by excessive speculation, the government is now trying to dampen the effects of their previous failure.
Nor is this the first time that insufficient government supervision of the financial system has created enormous suffering in our country. Before the Great Depression the free market ideology of today's conservatives was widely accepted. The stock market and the banks were free to do anything they wanted. Not surprisingly their speculation brought about the economic collapse of the Great Depression and an unemployment rate of 25% that lasted until the advent of World War II.
Ever since, financial transactions have been supervised by the government and that has saved us from some disasters although, as we can see today, not from all of them.
In our economy individual businesses compete for market share, for instance, by lowering their prices or by making investments that are slightly more risky than those made by competitors. If one competitor takes a risk, everyone has to follow suit or be left behind. Competition pushes every one into cutting corners. Airlines may try to save money on airplane maintenance; the banks may try to get ahead by the betting on riskier investments. If that process is unchecked it is only a question of time before truly unsafe products come to market -- think of the toys contaminated with lead, or dog food that poisons your pet--both imported from China to lower prices.
The government can stop competition from harming consumers, or the entire system, by forbidding certain sorts of risks. It alone can do that by imposing the same rules on every business and thereby putting limits on what competitors can do. Without such limitations the free market will hurt customers and the entire country.
These are not the only examples of government actions approved of even by many conservatives. (There has not been much criticism from conservatives of the Bear Stearns bailout.) When there are floods, tornadoes, and hurricanes, everyone expects the government to help out the victims Many have complained that the government has not done enough to help out the reconstruction of New Orleans. Few, if any, voices assert that we should just leave it to the free market to repair the damage done by a Hurricane Katrina.
Its a fairy-tale that the so-called free market, left to its own devices by the government would provide undreamt of freedom and prosperity for all. Experience contradicts that story; it is an article of religious faith--something believed even though experience decisively contradicts it. There is always room for argument about specific government interventions but to assert point-blank that our economy would be better off if the government kept its hands off, is to completely ignore the experience of the last 80 years. The conservative faith in the free market is just that--a faith, not supported by experience.
Easter Sunday, celebrating the resurrection of Jesus is therefore the best day of the year for reasserting the conservative principles. The story of the Resurrection is not supported by experience. Human beings, once dead, remain dead. Belief in the Resurrection is an act of faith; it goes against all our experience. Christian Churches recognize that.
Would that our conservatives where as honest as the Christian Churches. The belief in the free market similarly contravenes all experience. It, too, is an act of faith. It is time that our conservative commentators came clean and admitted that.
-
More about free markets I have written about the free market mythology before. I have pointed out that in the name of the free market, Congress has forbidden the government to bargain with drug companies over the price of medicines mostly bought...
-
The Free Market We hear daily about the blessings of the free market. But we hear a lot less about its limitations. In practice it is well understood that some things do well if traded in a market. Other things, we believe firmly, should...
-
p { margin-bottom: 0.08in; } Too smart for our own good? Larry Summers has resigned as head of the President's Council of Economic Advisers to return to Harvard as a Professor of Economics. This ends another phase in a very distinguished career...
- What Free Market?
What free market? Congress has finally passed a financial overhaul bill. It has created a number of new bureaucracies and tightened some rules to rein in the greed of bankers and investors. Time will tell whether this new bill will do what it promises...
- Regulating The Markets
Last week, Sen. McCain came out in favor of regulating financial markets. That is a departure from traditional Republican orthodoxy that is truly astonishing. For 100 years or more, Republicans and many Democrats have told us that markets are "self-regulating."...