Should the Crisis Shake Our Faith in the Market?
As 2008 draws to a close, we do well to reflect on the lessons we have learned. A new president has been elected and will be inaugurated in a few short weeks. The outgoing president claims that he must abandon free-market principles in order to save the free market. Somehow, this has translated itself into a multibillion-dollar bailout for politically favored carmakers. Should the current turmoil cause us to abandon hope and forsake the market economy? FULL ARTICLE
Comments (5)
Pat
The short answer would be no. But for those who need to be convinced, a little explanation is in order and this article is a good start.
Published: December 29, 2008 9:25 AM
Inquisitor
It is doubtful whether the intentions of Messrs Obama or Buffet are "noble". They are glorified thieves.
Published: December 29, 2008 11:19 AM
wonderfulforhisage
The 'meta' market (one that is on a higher level than the others) is the fx market. Since one of the major players in it (China) fixes their rate of exchange the fx market cannot be considered free.
If the Yuan had been allowed to float it would have appreciated years ago against the dollar and the excessive credit slopping about wouldn't have been available for the West to make fools of themselves with.
I understand that drug dealers supply newbies with cheap drugs until such time as they become 'hooked'. The West will now either have to go 'cold turkey' or beg borrow and steal to feed our 'habit'.
Published: December 29, 2008 12:28 PM
Josh
In the increasingly globalized economy, there is no such thing as a "free market." I guess we can all blog about the hopes that Germany, Japan, and China will shift from export driven mercantilist growth policies and become wise comparative advantage free trade nations, but fear of rioting Chinese peasants is probably more of a concern to the PBoC than whether Hayek and Ricardo would approve.
I think I need to do more reading on the Austrian solution for global trade imbalances that lead to the malinvestment of resources because of meddling governments in every corner or the world. But I assume they may just dismiss it because the conglomeration of millions of mutually beneficial micro-exchanges can't possibly lead to negative macro outcomes.
Or maybe they'll spend as much time attacking the PBoC, the Bank of England, the WTO, the IMF, as they do attacking the Fed.
Published: December 29, 2008 7:46 PM
Reg
Professor Carden,
I thoroughly enjoy your thoughtful comments on our economic situation, as a life long student of finance, and free markets, I learnt a lot today.
Yours from Canada,
Published: December 29, 2008 10:22 PM