Wednesday, March 17, 2010

Markets, rules, and the Free Market Fairy

Left: The Free Market Fairy prepares to bash a few people over the head with her (his?) magic wand.

I will first state a clear and obvious truth: Capitalism is the best way thus far that mankind has developed for creating a good life for the most people, and markets are an important component of the way in which capitalism operates.

That should answer the question of whether markets are useful or not. The question is not whether markets are useful or not, but, rather, the rules under which they are set up. If they are rules which punish fraud and reward fair dealing, what you will get is a market which accomplishes its purpose, which is to maximize the match between supply and demand of commodities and services and thereby maximize the efficiency and prosperity of the economy. If you attempt to create a "free market", one with *no* rules, what you are actually doing is creating rules which REWARD fraud and PUNISH fair dealing. This is because anarchy inherently rewards those who are most vicious, venal, and violent, which is why no society -- anywhere -- which adopts anarchy as its system of (non)-government functions in any reasonable manner.

It is the difference between realistic thinking and magical thinking. The believers in the Free Market Fairy apparently think the rules of the market simply appear out of nowhere, like magic. They don't. If you don't set rules, the rules of the jungle happen -- fraud and violence (financial or otherwise) become the predominant themes. There is a *REASON* why this nation's period of greatest economic growth was the decades between 1945 and 1980, when our markets were highly regulated to make sure they were fair and fraud-free, and that reason is that markets do not regulate themselves, despite the wishful belief in a Free Market Fairy that, via waving her (his?) magic wand, somehow via the Magic of the Market makes fraud, violence, and unfair dealing go away. So why, then, are our young people being ripped off by these unregulated trade schools? Why did Lehman manage to rip off so many billions of dollars with fraudulent transactions? It seems to me that this Free Market Fairy isn't doing so hot there, eh? But what do you expect from a grumpy tranny whose day job is as a kneecapper for the Mafia, anyhow? The Free Market Fairy has a pretty dress and sparkly wand, but look past those, and you realize that she (he?) is pretty darn scuzzy and hairy.

- Badtux the Pragmatic Penguin

1 comment:

  1. Good post. I don't know what "logic" (using the term loosely) the Right is using when they lash out at any degree of regulation as "Socialism!"

    We need some degree of regulation, just to prevent fraud (and worse). Even the bloodiest boxing match has a referee standing there to make sure the fighters don't break the rules.


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