
How Free Should a Free Market Be? - robg
http://www.nytimes.com/2008/10/05/weekinreview/05berenson.html?ref=weekinreview&pagewanted=all
======
SwellJoe
It's always distressing to see people presenting a failure of government as a
failure of the market. The government created this crisis, and the government
has responded by causing even more problems and costing taxpayers even more
money. By insuring lenders against loss from home mortgages for lower income
families (and actively encouraging risky lending so that everyone could "own a
home", even people who clearly could not afford to own a home)--practices
which reached unprecedented levels in 1999 with new legislation pushed through
by Clinton and both parties--the federal government practically guaranteed
that the sub-prime crisis would happen.

Now, the complaint is that the market is too free, and the general public will
happily believe it. But, markets require consequences, both positive and
negative. Poor business practices should lead to losses, while good business
practices should lead to gains. Lending on a massive scale to people who you
can be reasonably certain aren't going to pay you back is a business practice
that should lead to extinction for the companies participating in it.
Governments job is to enforce contracts: make companies liable for lies and
fraudulent activity. If, instead, they merely funnel a nearly trillion dollar
windfall right from taxpayers pockets into the pockets of those most guilty,
it insures more and worse of the same. It breaks the market in ways that
simply cannot be undone. America has ceded economic leadership status, and
turned over the economy to a handful of white collar criminals. What little
hope of recovery our economy had before the bailout is now gone. If there were
awareness of the problems amongst people making the decisions, it could be
corrected in a couple of generations...but denial rules the day, and so it
will only get worse.

Not that I'm bitter.

------
known
Free Markets make sense when Race To The Bottom is prevented.

<http://en.wikipedia.org/wiki/Race_to_the_bottom>

