Sunday, October 19, 2008

Why I'm Worried

Arnold Kling:

What we are seeing now is the Freddie/Fannie model applied to the entire financial sector. You need a government guarantee in order to be a player. Once government-guaranteed firms are on a firm footing, the equivalent of "affordable housing goals" is sure to follow. That is, government will be bossing capital around to an even larger extent than before.

I have a sinking feeling that misplaced hostility towards free markets (how exactly are our current markets "free?") will lead to policies and regulations that are increasingly hostile to liberty and capitalism. Maybe not...maybe everyone will just agree to make markets more transparent, thereby allowing for a better understanding of risk. But I'm skeptical that things will work out that nicely.

So economic liberty is in for a rough ride in the coming years (decades?). But I'm confident that, in time, the failures due to whatever increases in government intervention the reaction to the current crisis brings will become evident, trickling down from brilliant academics all the way down to the masses. Eventually pop-economics books will be written that use clever metaphors and narratives to convey the flaws of government intervention to society. So there's hope. As Russ Roberts has said:

So if you love liberty and fear those who would engineer our well-being rather than let it emerge from our free choices, if you love liberty and fear those who would use good intentions as an excuse for plunder, don't worry. We'll have our day down the road. Keep reading and writing and thinking. And don't yell. Above all, smile and hold firm to your principles. They will be remembered and valued when the pendulum swings the other way. It's just a matter of time.

Hopefully sooner rather than later.

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