How did the “free market” fail us?

December 20, 2008 | By | 4 Replies More

How did the “free market” fail us?  How about this?  It was a matter of dogma over evidence, a theme that connects the blots–the long string of massive failures caused by conservative Republicans over the past eight years.

In an article called “White House Philosophy Stoked Mortgage Bonfire,” the NYT analyses the causes of the economic meltdown.   One dominant cause is that the “free market” was put high up on a pedestal by a huge number of politicians, advisers and investment professionals who should have known better.

“This administration made decisions that allowed the free market to operate as a barroom brawl instead of a prize fight,” said L. William Seidman, who advised Republican presidents and led the savings and loan bailout in the 1990s. “To make the market work well, you have to have a lot of rules.”

But Mr. Bush populated the financial system’s alphabet soup of oversight agencies with people who, like him, wanted fewer rules, not more.

When I think of the current terrible turn of events, I am glad only of the timing of the meltdown.  It was caused by the Republicans and the whole mess blew up in their faces.   Imagine if the meltdown had occurred only a few months later, after the January 2009 inauguration.   If that had happened, there would have been hundreds of high ranking Republican politicians and pundits blaming this whole mess on Barack Obama, making meaningful reform all-the-more unlikely.

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Category: Economy, Politics

About the Author ()

Erich Vieth is an attorney focusing on consumer law litigation and appellate practice. He is also a working musician and a writer, having founded Dangerous Intersection in 2006. Erich lives in the Shaw Neighborhood of St. Louis, Missouri, where he lives half-time with his two extraordinary daughters.

Comments (4)

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  1. Erich Vieth says:

    Speaking of dogma over evidence, there is definitely a new President coming to Washington D.C.:

    The president-elect warned that promoting science is "about ensuring that facts and evidence are never twisted or obscured by politics or ideology," an apparent reference to the Bush administration's response to research on global warming.

    "It's about listening to what our scientists have to say, even when it's inconvenient — especially when it's inconvenient."

    http://rawstory.com/news/2008/Obama_Science_key_t

  2. The dismal science has turned nightmarish, with its demons and fits; but one thing about good timing, you're always asleep.

  3. Erich Vieth says:

    It's time to drive the final nail into the coffin of laissez-faire capitalism by treating it like the discredited ideology it inarguably is. If not, the Dr. Frankensteins of the right will surely try to revive the monster and send it marauding through our economy once again.

    We've only just begun to bury the financially dead, and the free market fundamentalists are already looking to deflect the blame.

    Arianna Huffington, at http://www.huffingtonpost.com/arianna-huffington/

  4. Erich Vieth says:

    In a widely attended brainstorming session at which participants were asked what single failure accounted for the crisis, there was a resounding answer: the belief that markets were self-correcting.

    The so-called "efficient markets" model, which holds that prices fully and efficiently reflect all available information, also came in for a trashing.

    Joseph Stiglitz, writing for The Guardian. http://www.guardian.co.uk/commentisfree/2009/feb/

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