"and treating the 'free market' as religion is very obviously (right now) the wrong path."
The problem with the free market is that it rewards gamblers. There are great rewards for those who gamble, at the expense of risk. That is ok if everyone is about the same size. If Joe's Bar and Computer Repair goes bust, there will be another soon to replace it. But, when economic power starts to get concentrated in fewer and fewer hands, the damage from failure starts to increase. If GM goes tits up, there isn't going to be anything to spring up to fill that gap. The best that can happen is the economic power gets concentrated in fewer hands. That is what was behind the Panics of the 19th century. Before then, large companies tended to be arms of the various royal courts and had were insulated from bad gambles. They, in fact, had little incentive to gamble. But the 18th and 19th centuries saw the rise of large companies not directly connected to the governments and when they crapped out, they took their economies with them. It was ok if you were wealthy enough, you could ride out the crash and then had resources to get to the tables early and start placing your bets. But, everyone else got wiped out every decade or two.
In the wake of the Long Depression, the movement to curb Trusts grew up. The idea was to break up those concentrations so the damage was limited. It didn't work all that well, so the Great Depression pushed us, and by us I mean the developed world, to institute rules to curb risk taking. Granted, a side effect was to restrict the potential of those who lacked common sense, but risking the economy by nit wits was considered to be a bad thing. Unfortunately, the nit wits were able to convince others that, instead of being nit wits, they actually were financial geniuses, and those regulations were handcuffs restricting the true power of the Market.
And now, here we are, learning the same lessons over and over again. |
