Free Markets

Just to contradict my last post entirely, my commenter built on the dogmatic idolization of free markets that pervades so much of the right wing. Anyway, don’t take my word on why that’s wrong, listen to Alan Greenspan:

But on Thursday, almost three years after stepping down as chairman of the Federal Reserve, a humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending.

“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told the House Committee on Oversight and Government Reform.

Now 83, Mr. Greenspan came in for one of the harshest grillings of his life, as Democratic lawmakers asked him time and again whether he had been wrong, why he had been wrong and whether he was sorry.

Critics, including many economists, now blame the former Fed chairman for the financial crisis that is tipping the economy into a potentially deep recession. Mr. Greenspan’s critics say that he encouraged the bubble in housing prices by keeping interest rates too low for too long and that he failed to rein in the explosive growth of risky and often fraudulent mortgage lending.

“You had the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis. You were advised to do so by many others,” said Representative Henry A. Waxman of California, chairman of the committee. “Do you feel that your ideology pushed you to make decisions that you wish you had not made?”

Mr. Greenspan conceded: “Yes, I’ve found a flaw. I don’t know how significant or permanent it is. But I’ve been very distressed by that fact.”

Free markets sound fantistic in their unfiltered purity, but at it’s core, the ideology that espouses the supremecy of totally unfettered markets is essentially a variant of unbridled Darwinism. Taken to it’s logical extreme — in the same way that Barack Obama’s economic plan has been labeled “Marxist” — Free-Marketism (as I’ll henceforth refer to it) is economic anarchy. Certainly the banks seeking safety in the blanket of government bailouts aren’t calling for the dissolution of Federal regulation?

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2 Responses to “Free Markets”

  1. pacer521 Says:

    hmm….

    great post and blog. I am really enjoying the commentary over here lately.

    http://culturedecoded.wordpress.com/2008/10/23/thearmsrace/

  2. Willie Says:

    Good job. Nice reading.


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