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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: yard_man who wrote (3981)	4/8/2004 6:28:33 PM
From: CalculatedRisk	Read Replies (1) of 116555

In response to this statement you wrote: "We need to let markets work and stop the meddling." In fact, Laissez Faire capitalism has three main flaws: 1) It concentrates wealth in the hands of a few. This eventually is self defeating and lowers aggregate demand. Right now our fiscal policy is exacerbating this problem. 2) It can be in equilibrium at any level of unemployment. This is socially unacceptable (if the unemployment level is too high) and can lead to hidden costs associated with high crime or social unrest. 3) It ignores the costs of common assets like water and air ("Tragedy of the Commons") Therefore, we MUST meddle. We must meddle if unemployment gets too high. We must meddle if wealth distribution becomes too distorted (by shifting the tax burden more towards the higher income individuals). And we must meddle to protect our common resources. BTW, I am a small government, free market, capitalist. It helps to understand and correct the flaws rather than ignore them and allow them to fester.

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