Thursday, April 7, 2011

Fixing Our Economy Is As Easy As 1 2

Two changes to help sort our stuff out. These are a combination that I think are direly needed (and related). 

(1) As pointed out by Russ Roberts over at Cafe Hayek (already linked his paper a couple time), loss needs to be returned to the market. The financial meltdown occurred in large part because the financial industry felt confident betting with other people's money with the implied assurance that the government would bail them out if something drastic happened. 

(2) The state needs to supervise the market as opposed to the other way around (a point brought up by Foucault cited by Palma in a good article on the meltdown). It doesn't do us much good to ask GE to write tax laws. It doesn't do much good to allow Wall St to pick and choose which regulators they'd like. Or to ask polluters to write laws on pollution. The government determines the rules that the market will play by. Or at least that's the way it should be.

There is nothing "natural" about markets or capitalism. They are products of our cultural milieu -- in much the same way that football is. There is nothing "natural" about football. Someone invented it and then we found out it worked (and we liked it). But football does not exist outside of the rules that were constructed to play it. The same goes for the market. The government sets up the rules that the market should play by, then the market plays. The way things have been operating (since 1980 or so) has been, in effect, that the Super Bowl winners have been allowed to write the rules for next season.

And this brings us to campaign finance reform and political contributions. 

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