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Source link: http://blog.mises.org/11293/farewell-richard-posner/

Farewell, Richard Posner

December 21, 2009 by Mises Daily

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Posner’s thesis — that the depression represents a market failure brought on by deregulation — pivots on the myth that regulators actually regulate rather than serve the interests of leviathan beneficiaries. FULL ARTICLE by Allen Mendenhall

{ 5 comments }

Barry Loberfeld December 21, 2009 at 8:25 am: Yup, same old story: Regulators serve the regulated.

From here:

The situation was paralleled across the Great Pond, where a nation virtually born of a revolution against mercantilism began to sire its own mercantilist enterprise. Mythologized as the “Progressive Era,” when the Little Man and his (self-anointed) champions rose up to bridle the “economic power” of Big Business, this was actually — in the phraseology of Gabriel Kolko — a “triumph of conservatism,” wherein the established “business and financial interests” sought to fend off upstart competitors by resorting to reactionary means: government intervention in the economy.

The “departure from orthodox laissez faire” is by and large the only part of the myth that was true. Instead of a handful of cephalopod monopolies using their “economic power” to constrict competition, the “dominant tendency in the American economy at the beginning of [the twentieth] century was toward growing competition,” which the older corporations could not stop — without political favoritism, that is. So “it was not the existence of [free-market] monopoly that caused the federal government to intervene in the economy, but the lack of it.” The new state regulatory bodies and their decisions were “invariably controlled by leaders of the regulated industry, and directed toward ends they deemed acceptable or desirable … [mostly] because the regulatory movements were usually initiated by the dominant businesses to be regulated,” e.g., the Interstate Commerce Commission and the railroad industry (and over the decades many others, such as the Food and Drug Administration and the pharmaceutical industry, the Securities Exchange Commission and the securities industry, the Federal Communications Commission and the various communication fields, the Civil Aeronautics Board and the airline industry, etc.).
Daniel Hewitt December 21, 2009 at 9:48 am: Good article. I’ve been meaning to pick up this book from my library and read it for some time now (it’s good to be familiar with opposing views).

And a slight tangent:
Why do libraries ALWAYS have books like this, yet if I search for Mises or Rothbard – nothing. I think this makes a good case against publicly funded libraries.
Frank Sanchez December 21, 2009 at 1:23 pm: I agree this is a good article. It’s odd how Mr. Posner could convert from a libertarian-rationalist viewpoint to a Keynesian. I would be very interested in reading what personal events and/or literature contributed to this weird conversion for Mr. Posner.
Jon Leckie December 21, 2009 at 1:38 pm: To Frank Sanchez. Frank, perhaps we need to add a third leg on to Churchill’s famous formulation: if you’re not a socialist at 20, you don’t have a heart, and if you’re not a conservative at 30, you don’t have a brain and if you’re not a Keynesian at 60, well no one will give a damn what you have to say anyway.

Maybe it’s just that after lifetime of pissing into the wind you just get sick of the effort and join the lunatics in charge. Of course, he might have always been a closest Keynesian – legislating the optimally efficient outcome is no more possible from the judicial bench than the legislative chamber. I think a recent article on this website ran through this point of view. Last few days if you want to look for it.
Magnus December 21, 2009 at 9:23 pm: Posner’s an elitist, and a control-freak, and he’s never once grasped the basic gist behind the economic calculation problem.

He proposes that courts can craft legal rules of property to maximize wealth. However, the idea that the calculation of costs and benefits is substantially altered by changes the legal rules and expectations of litigants never seems to have crossed his mind.