A long one this time, Ace puts his finger on what's wrong with the folks who think we should just ignore the current chaos in the financial markets:
That'll be the day. Right now, it's more like a rampaging mob. True, they'll disperse eventually, but just how much of the town centre will they burn down beforehand? Also true, to keep the analogy going, torching the local amenities may indeed create room for new and more exciting developments, but can the gains really be enough to make it worthwhile to rebuild from scratch?
I think a lot of this anti-intervention sentiment arises from the libertarians and their hope for an annihilating disaster which will sweep away statism and leave them free to rebuild the world as a libertarian utopia.
Well, y'know, that's them, but there's no reason why conservatives should take tips on damage control from people who fantasise about a Year Zero.
UPDATE:
In case you missed it, we had a drive-by by a libertarian in the comments. I always delete that stuff on sight - hey, they're always fantasising about being Neo in amongst the sheeple, so I say give them the persecution they obviously get off on.
All of which is by way of saying that's what TDK is referring to in amongst asking a good question: namely - and I hope this is a fair summary - in so far as government brought on the crisis anyway, why trust them to fix it?
The quippy answer would be 'you broke it, you bought it' - and the more I think about it the better that sounds. After all, banking has never really been a free market at least as far back as King Henry carving the nads off bankers (don't tell Harriet Harman about this). Equally, given the central importance of filthy lucre to ever other industry, government can no more let the free market run free here than they can let the taps run dry to teach the utility companies a lesson. The potential collateral damage is too great.
There's also Ace's original point, namely that the defining feature of booms and busts is that the market isn't working rationally. Sure, it might be natural for markets to implode at regular intervals, but is an economic Hiroshima every so often really a good thing? Crunch question: are the dangers of government intervention really worse than the risks of allowing an economic collapse? Yes, say libertarians they are. Well OK, but lets be clear about what it is these people are advocating: total disintegration of the global economy. You don't have to be a caricature 'statist' to quail at that.
I know precious little about economics and still less about South American economics, but I do know this: The history of South America is nothing but big booms (during which South American countries grow more rapidly than any mature economy) followed by profound busts -- depressions, basically....This has always worried me about economics in general. It all works fine proving you assume that everyone is an atomised unit moving logically to maximise his economic efficiency.
Is it really true that the "markets sort out depressions and panics" more efficiently than would be had by Big Footing Government Intervention?
Is it really true that it's rational (and healthy) to have six or eight years of 10% growth followed by four or six years of severe economic contraction of 10% and unemployment reaching, who knows (I don't), 30%?
I don't believe that. I believe the boom-times are irrational and "artificial," in the sense that they're not based on any reasonable estimation of future economic growth, and the massive busts are even more irrational and artificial.
They are "natural," however, in the sense that that's how people behave, and will keep on behaving, forever, until the end of time.
And even if that's "natural" (which I concede it is), I cannot concede it's healthy or desirable. Nor can I concede this represents the best, most efficient growth trajectory possible. I do not believe that South American economies are healthier for the fact they essentially start out again from zero, almost as if they're rebuilding after a Road Warrior scale apocalypse, every fifteen years.
That'll be the day. Right now, it's more like a rampaging mob. True, they'll disperse eventually, but just how much of the town centre will they burn down beforehand? Also true, to keep the analogy going, torching the local amenities may indeed create room for new and more exciting developments, but can the gains really be enough to make it worthwhile to rebuild from scratch?
I think a lot of this anti-intervention sentiment arises from the libertarians and their hope for an annihilating disaster which will sweep away statism and leave them free to rebuild the world as a libertarian utopia.
Well, y'know, that's them, but there's no reason why conservatives should take tips on damage control from people who fantasise about a Year Zero.
UPDATE:
In case you missed it, we had a drive-by by a libertarian in the comments. I always delete that stuff on sight - hey, they're always fantasising about being Neo in amongst the sheeple, so I say give them the persecution they obviously get off on.
All of which is by way of saying that's what TDK is referring to in amongst asking a good question: namely - and I hope this is a fair summary - in so far as government brought on the crisis anyway, why trust them to fix it?
The quippy answer would be 'you broke it, you bought it' - and the more I think about it the better that sounds. After all, banking has never really been a free market at least as far back as King Henry carving the nads off bankers (don't tell Harriet Harman about this). Equally, given the central importance of filthy lucre to ever other industry, government can no more let the free market run free here than they can let the taps run dry to teach the utility companies a lesson. The potential collateral damage is too great.
There's also Ace's original point, namely that the defining feature of booms and busts is that the market isn't working rationally. Sure, it might be natural for markets to implode at regular intervals, but is an economic Hiroshima every so often really a good thing? Crunch question: are the dangers of government intervention really worse than the risks of allowing an economic collapse? Yes, say libertarians they are. Well OK, but lets be clear about what it is these people are advocating: total disintegration of the global economy. You don't have to be a caricature 'statist' to quail at that.
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