What’s a Free Marketeer to Think?
Such is the series of columns at American Experiment. The founder, Mitch Pearlstein, invited free market think tanks to contribute essays on the topic. If you go to their main page (linked above), you can see a list of the volumes. Most people are against the Paulson bailout, but some think it is a regrettable necessity.
My contribution is in the middle of this volume. An excerpt:
Many, if not most, policy analysts would agree that capitalism is a better social arrangement than socialism, and that free markets provide sustained economic growth showering prosperity on all citizens. Yet for some inexplicable reason, many of these same analysts lose all faith in the power of markets during times of crisis. All of a sudden, even many cynical right-wingers – let alone the liberals – believe that 535 people in Washington D.C. know better than legions of financial professionals in New York and Chicago. Yet this is just one of many contradictions in our current crisis.
For example, we are told that the housing boom was caused by cheap credit and lax oversight, where greedy lenders made it too easy for unqualified applicants to receive loans. But at the same time, we are told the limits on Fannie and Freddie, as well as the FDIC, must be relaxed, and that taxpayers must spend $700 billion in order to “unfreeze” the credit markets, that is, to get easy credit flowing to borrowers as it has been in the recent past.
We are told that the government must enact bold measures, lest we relive the Great Depression. Yet at the same time, we are told that the measures we need to take are precisely those adopted by Franklin Roosevelt in the 1930s. Indeed, this is why so many news articles over the last year have included variations of the phrase, “a government power not used since the New Deal.”
