Stubbing It's Laissez-Faire Toe
As one who believes laissez-faire capitalism is deeply flawed. I find myself warmed by a feeling of "schadenfreude". The US in it's economic wisdom has had to take over Fannie Mae and Freddie Mac, the two institutions that support, no abuse, the mortgage market.
For those who believe that the discipline of the free market place is the best way to regulate businesses and markets, this must be deeply embarassing, a bitter pill to swallow. Worse than that the American people are now on the hook to the tune of billions of dollars to save the mortgage industry which was expected to regulate itself. Instead, greed, criminality and dreadful judgement caused wealthy and powerful financiers to mismanage, mislead and put at risk the mortgages on homes of people who believed one can trust "the bank."
Under laissez-faire Capitalism these institutions should have been allowed to fail. It turns out that more people will be hurt if these two institutions fail so the government basically has had to nationalize them. (Creaping socialism Doesn't it just make you smile.) I recently heard an economist speak on how the cheap credit and credit card business, will be next. So the pain may not be over.
The fact is free markets are a vicious predator environments. It should be the government's responsibility to regulate them and tame the environment. The United States is the one country in the world which aspires to laissez-faire capitalism and through it's control over the World Bank and the International Monetary Fund it tries to inflict some of its principles of noe-liberalism on the rest of the world, particularly third and fourth World countries. This is what globlization is all about.The clearest example of this is the destruction of Argentina's economy a few years back. I once read this: "What is the difference between Argentina and the United States? One year." A scary thought. http://www.washingtonpost.com/wp-dyn/articles/A15438-2003Aug2.html
It is governments' responsibility to regulate institutions and businesses which are critical to the safety, economic security, and well being of the Nation. We all could make our list: banks, schools, food safety, health care, policing, military, banking, monopolies etc. I personally think key industries, like some of the above, should not only be regulated but nationalized: oil exploration, electrical distribution, water resources, railroads, highways, and nuclear facilities. These are too important to let the vultures in the free market control them to maximize profits.
These days the "experts" are pulling back against government regulation. Industries are asked to regulate themselves and in government agencies, inspectors and regulators are struggling to do their work with insuffcient funds. We are all put at risk with this weaking commitment to government regulation.
I expect Fannie Mae and Freddie Mac, which were first created by government to meet a mortgage need, and then privatized, will be salvaged, and made solvent out of the public purse, and then turned back over to the private "self-regulating" sector to be managed for profit, until greed, criminatity and mismangement created a corrupt institution once again. It would be better if it remained nationalized after the American people's money, to the tune of billions, brought them back to health. I doubt it that is the American way.
posted by Tossing Pebbles in the Stream @ 2:10 p.m.
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3 Comments:
Many great post here. Thanks for sharing
Philip--I am not one of those U.S. citizens who applauds the free market.
The current Bush administration has done its best to gut government institutions and replace them with profit snatching cronies--witness KBR et al. I find it appalling that public resources have been diverted for private gain. Shameful!
You really should be a politician!!!
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