The distribution of a trillion dollars by a political institution -- the federal government -- will be nonpolitical? How could it be? Either markets allocate resources, or government -- meaning politics -- allocates them. Now that distrust of markets is high, Americans are supposed to believe that the institution they trust least -- Congress -- will pony up $1 trillion and then passively recede, never putting its 10 thumbs, like a manic Jack Horner, into the pie? Surely Congress will direct the executive branch to show compassion for this, that and the other industry. And it will mandate "socially responsible" spending -- an infinitely elastic term -- by the favored companies.(HT Don Boudreaux)
Sunday, November 16, 2008
Socialism? It's Already Here
George Will:
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4 comments:
First of all, that term "socialism" is bandied about all too often and carelessly, a by product of the McCain/Palin propaganda campaign and in general Republican talking points.
In reality, we will never have totally unfettered capitalism, just like we will never have total socialism. There will always be a mix of markets and govt, and the challenge will always be to find the best balance at the time.
The reason why we will never go to one extreme is that either extreme is too awful.
Any time you have govt, you will have some impact on the distrubtion of wealth. The last 8 years have seen a huge redistribution of wealth to the very wealthy, largely due to govt policy.
And for those critics of any govt intervention during this economic crisis, I only ask: what is the alternative? Do you really believe letting the markets totally collapse is a feasible or desirable outcome?
George Will is right in that there is a large distrust of markets now, but why? Because a largely unregulated market failed us.
We have a large distrust of markets right now because of government failure which politicians blame on the market. Unfortunately, politicians have a large microphone. Markets don't.
What is the govt failure that brought this current financial crisis upon us?
The only one I can see is a total lack of regulation of the relevant markets involved.
Govt didn't cause private mortgage lenders to make loans to those without sufficient credit quality. Govt didn't cause investment firms to leverage themselves 30 or 40 to 1 with exotic investment vehicles involving mortgage backed securities.
This was a clear example of a market run wild, and govt's only fault was in not stepping in to impose some reasonable standards.
"govt's only fault was in not stepping in to impose some reasonable standards."
Well, to be fair... the government DID step in. They stepped in with things like the Gramm-Leach-Bliley_Act:
http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act
and when they forced Fannie Mae to ease the rules to encourage more home ownership... even to *gasp* people who probably had no business owning homes:
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260
So there is your government intervention... just probably not the kind I would have hoped for. We have yet to truly see unfettered market forces at work. Somehow there always seems to be some government force getting in the way to steer it into something it's not.
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