Good lord. Here's someone who doesn't have a single clue about what this country was built on or how the real world works, and she is paid (I presume) good money to write a column for a major American newspaper:
What I can't get out of my head is the way we've been suckered again into believing the malarkey sold by Milton Friedman, Ronald Reagan, Alan Greenspan and a long list of conservative think tanks, that the market is our savior. It is so convenient to make government the bad guy, the one who interferes with everyone's pot of gold, and make open markets the answer to what ails, as Reagan did so often. But the historical reality is that the free market has a dark side that causes social displacement and instability, and by its nature it is an uncaring thing.
The free market does not raise eyebrow when investor obsession with short-term profits results in outsourcing for cheap, exploitable labor overseas and the abandonment of health benefits or pensions for whatever American employees remain. Rather it cheers.
The market is not the best part of America. Not even close. Our government is the best part — or at least it used to be before the current gang took over.
Ultimately, it is government that defines who we are and lays out a path for how our society will be.
Sigh. Well, just go vote for Clinton or Obama, and I hope you'll be happy with how the goverment "defines who we are."
"The market" -- free people making informed choices and living with the consequences of their decisions -- is not the best part of America? Stand in line for your handouts and marching orders, babe, and wake me when it's over.
Comments
free people making informed choices and living with the consequences of their decisions
When are we going to get one of those kinds of markets? Sounds kind of nice.
This crony-capitalist market-substitute where transparency is limited and bail-outs are common just isn't cutting it.
If the hand of the "free" market is supposed to be invisible, how come we can see it?
Friedman's world is privatized profit but socialized risk. Prime example is the Wall street bailout. Where are all of the free marketeers on this one? Should not these marginal investment banks be allowed to fail? isn't that how the "free" market was supposed to police itself?
The reality is there is no "free" market. Even Adam Smith, and of course keynes never intended for unfettered wild west capitalism that always slants towards wealth and power. There must be checks and balances.
The new deal ushered in 4 decades of shared prosperity and unprecedented growth. The dismantling of the new deal has had quite the opposite effect. we have returned to the "gilded age" of rampant specualtion, debt fueled consumption, monetarism and one ponzi scheme after another creating bubble after bubble - thanks Greedspan! we all know how that turned out.
The author is the one with a clue, the critic is the one without in this case
Actually, market bailouts are relatively uncommon. You have to go back to 1914 to find where the federal government, under a Democrat, interfered with the NY Stock Exchange by shutting it down for 4 months when we entered WWI. FDR tried a similar tactic by shutting banks for 4 days in 1933. Neither of these were bailouts since no federal money was fronted.
Federal loans were used to keep Lockheed in business in 1971 and Chrysler in 1979, but the loans were repaid with interest. The most costly bailout was the S & L fiasco in which cost the American taxpayers over $100 billion in 1995.
Of late, "white knight" companies in cooperation with the Fed have propped up failing companies such as
Bear Stearns who got Federal Reserve help long enough for JP Morgan Chase to buy out the company.
So I guess I don't understand what "crony-capitalist market-substitute" means to Doug Masson. Last time I looked there were no black helicopters buzzing around ...but beware of the Bilderbergers!
The Friedman era is finally and thankfully coming to a close
By Jeff Madrick
The Bush administration has thrown in the towel on the long battle begun in the 1970s to minimize government oversight of the economy. In light of the credit crisis, it now wants to regulate Wall Street. Treasury Secretary Paulson has put to together broad set of reforms, not truly effectual, but a serious start.
This marks, at last, the end of the Age of Friedman. And not too soon.
There is a direct line from Milton Friedman's ascendancy in the 1970s to the debacle on Wall Street today. Friedman had been working his brand of economic ideology roughly since the late 1940s and early 1950s, but he did not strike gold with mainstream economists and the public until the hyper-inflation of the 1970s.
He had a double-barreled approach. He was a respected scholar who ingeniously sought to prove his views with empirical and statistical research. These views were largely anti-Keynesian. John Maynard Keynes preached that government spending could ward off recession or at least ameliorate their impact. Friedman argued there was little to do but maintain a regularly growing money supply.
But Friedman's monetarism was discarded long ago -- officially by the Federal Reserve in 1984. They worry about interest rates now, not money, which was always a Keynesian principle, if initially of lesser concern. And, in fact, traditional Keynesian stimulus has made a big comeback. The conservative Bush clambered to get aboard a Keynesian fiscal stimulus package initiated by the House Democrats in December.
The second barrel was Friedman's articulate popular policy writings. What did remain of Friedman's philosophy (aside from one academic contribution, the overstated natural rate of unemployment philosophy) was his deeply held, well-articulated and simplistic view that government regulation was almost always bad for us.
Competition was the great disciplinarian of market excess, wrote Friedman, obeying such predecessors as Friedrich van Hayek, author of The Road to Serfdom. By 1999, even Bill Clinton and many a Congressional Democrat fully supported the elimination of key financial regulations established in the New Deal.
As night follows day, what happened was a return of the excesses of the 1920s. Competition is not enough to ward off excesses. Free floating prices do not automatically stabilize economies. Financial markets in particular encourage excess naturally, a point made by the more profound economist, Hyman Minsky.
Friedman's followers will seldom admit that much of his public policy was not supported by genuine empirical research, unlike his monetarism. At least, because Friedman did the homework, one could debate with him on the groundwork of his views in these areas. In my view, the empirics never supported the stronger propositions he made.
But in the area of public policy, it was largely ideology. It was mostly an exaggerated application of Adam Smith's invisible hand: we would all be better off if we just maximize our profits.
Why did Friedman's views become popular? As he himself conceded, crisis in the 1970s demanded a new set of ideas.
Crisis in the 2000s is now demanding a return to greater realism. Will the nation overshoot, as it did with Friedman's ideological deregulation? Not likely. The powerful vested interests are around to keep government regulators in check. The Bush administration proposals reflect that; they are weak. And though the Democrats are on the case, it is most likely the nation will not do enough.
But if the demise of simplistic Friedmanite ideology is now upon us, at least this crisis has had one silver lining. And perhaps we can begin to discuss more openly, and better deal with, why this economy has served most Americans so poorly since the 1970s.
http://www.huffingtonpost.com/jeff-madrick/the-end-of-the-age-of-mil_b_94228.html
Some of the myths of the "free market" ideology
That supply somehow creates demand. example the push for more skilled and educated workers, presumably to magically create jobs - doing what exactly that won't be shipped to china or India?
That the free market encourages innovation - quite the opposite, the free market favors the status quo - or path of least resistance and greatest profit - example the energy industry - as long as it remains obscenely profitable there is no motivation for innovative alternatives.
That markets and people behave rationally - this one is a hoot. Anyone who has worked in the corporate world knows this to NOT be the case
Markets self regulate and self police - hahaha we see how well thats working
Of course, neither the market nor the government is the best part of America. It is,instead, the collective wisdom of the American people over the 225 years or so of our existence as a nation that has kept either from gaining total control over the economic life of the nation.
A totally free market system- meaning unregulated capitalism- is a morally repugnant concept, every bit as explotative as communism. On the other hand, there are plenty of horrible examples in human history of what happens when governmental control runs too rampant.
Leo is the one without a clue. He has bought into revisionist history and Libertarian nonsense. The real world doesn't work the way he says it does. He just wants it to work that way.
A.J. is completely correct. Any tiny shred of belief I had in the the economic "laws" I was taught in college disappeared pretty quickly once I saw how corporate America really operates. That opinion was constantly re-enforced over the course of 40+ years of exposure to it.