'Free-Marketeers' have it wrong
Athos, Porthos and Aramis, the crusaders from the novel “The Three Musketeers” by Alexandre Dumas reminded me of another trio of crusaders in America: Alan Greenspan, Ron Paul and Glenn Beck.
“The Free Marketeers,” as I often call them, are a group of free-market fundamentalists who have been wrong about so much, yet are heralded as an infallible brain trust.
These prophets of laissez-faire economics present a false choice between the heavy hand of government and the invisible hand of the market.
“The invisible hand of the market,” a metaphor used by economist Adam Smith in his book “The Theory of Moral Sentiments,” was used to illustrate the point market forces, not government, should be used to allocate resources within society.
Free-market fundamentalists often cite the point made in Smith’s book, all the while omitting another point that Smith made within the very same text.
Smith also believed government had an important role to play in the economy. He believed the government should enforce contracts, provide public works and most importantly protect consumers.
A disciple of Smith’s, Greenspan is the former chairman of the Federal Reserve. Greenspan preached Smith’s first point about free-markets for years, but he seems to have forgotten the second point.
But finally after the largest financial crisis in recent history, the former chairman conceded maybe he was wrong in assuming that markets would police themselves.
“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told the House Committee during a hearing in October of 2008.
As chairman of the Fed, Greenspan allowed lax oversight of the banking industry. He also enacted policies that made it easy for banks to acquire the money they needed to make the risky bets that nearly brought down the entire American economy.
And according to Rep. Paul of Texas, the second of the “Free Marketeers.” any attempt to reverse what the former chairman did would be socialism. So beholden is Paul to the ideology that markets are infallible, he proposes abolishing the very institution where Greenspan worked.
“I don’t think we need regulators,” said Paul.
Instead, he suggests a currency based on a gold standard should be instituted. Gold, a tenant of free-market idealism, might have worked decades ago, and did during the Bretton Woods system. But it is impossible now that there is more money in the American economy than there is gold to represent it.
Peddling the same message is the newest member to the “The Free Marketeers,” Beck, The D’Artagnan of the story, and taking the mantel from Ronald Reagan, Beck has made it a practice to scream into every TV in America.
For an hour every weeknight, Beck convinces many of his viewers, the very people who should want consumer protections from the negative externalities of business, to reject them.
And Beck supports the very same theories as his predecessor: trickle-down economics, a version of economics that continues to allow the rich and the powerful to hold out buckets catching all of the wealth before it trickles down to the unemployed and less fortunate.
Greenspan, Paul and Beck, the charlatans of economics are peddling nothing more than an ideology that amounts to corporatism masquerading as capitalism.
America’s flirtation with free-market fundamentalism hasn’t produced a richer society, but one that knows all too well how quickly the tides of unfettered markets can turn against it. Tyco, WorldCom and Enron, took advantage of America’s romance with unregulated markets.
“The reason that the invisible hand often seems invisible is that it is often not there,” Nobel prize-winning economist Joseph Stiglitz said.
If the recent financial crisis has done anything it has brought America the chance to ends its relationship with unregulated markets, know markets are fallible, and end its flirtation with an ideology that preaches the opposite.
The term “free-market” is meant to denote free enterprise or competition in the marketplace; it doesn’t mean the freedom of business to pollute, collude with competitors, or the freedom to swindle the average American.