I've been fairly astonished to see some of the vitriolic piling on against libertarianism with the meltdown of the derivative markets and subsequesnt bailouts.
Does anyone think Libertarians have been running the Federal Government? Really? Here's your reality check.
Ok, some point to Alan Greenspan, the erstwhile Ayn Rand devotee. You know- the same Greenspan that presided over the Fed during the entire Clinton Administration- that mythical period of time of milk & honey. I wouldn't call Greenspan a libertarian. Any libertarian running the Federal Reserve would have done anything in his power to return our dollars to specie-backed legitimacy. That certainly didn't happen. Link to Murray Ruthbard's libertarian critique of Greenspan.
Moreover, what made the trading in derivatives legal in the first place? A law signed by Congress, unanimously, in 2000. Catch 60 Minutes last night?
The vehicle for doing this was an obscure but critical piece of federal legislation called the Commodity Futures Modernization Act of 2000. And the bill was a big favorite of the financial industry it would eventually help destroy.
It not only removed derivatives and credit default swaps from the purview of federal oversight, on page 262 of the legislation, Congress pre-empted the states from enforcing existing gambling and bucket shop laws against Wall Street.
"It makes it sound like they knew it was illegal," Kroft remarks.
"I would agree," Dinallo says. "They did know it was illegal. Or at least prosecutable."
In retrospect, giving Wall Street immunity from state gambling laws and legalizing activity that had been banned for most of the 20th century should have given lawmakers pause, but on the last day and the last vote of the lame duck 106th Congress, Wall Street got what it wanted when the Senate passed the bill unanimously.
So, at what point do we blame lawmakers. It seems pretty clear that they didn't even read what they voted on. Just like the Patriot Act. Just like John McCain and the proposal for the bailout when it was merely 3 pages long.
The bucket laws were good regulation. The bets on stocks without any skin in the game affects the stock price. It's not like a football game, where the bets do not affect the outcome of the game. (This leaves aside point shaving, NBA refs, the 1919 Black Sox, and other notorious interactions with gambling.)
Unfortunately, I believe that this one place is going to place America squarely in the pro-regulation camp for everything. It's kind of ironic, because the critics of deregulation and capitalism decry its' adherents as 'dogmatics' and 'idealogues' in the pejoritive, when they themselves as dogmatically and idealistically pro-government, pro-regulation, and anti-capitalist.
6 comments:
Maybe people are confusing "libertarian" with "libertine"?
Well, that happens with some issues, but that's not what I think this is.
Liberty and socialism are polar opposites. Certainly many on the left know this. They see their opportunity lying in wait before them. How best to move things as far as possible in your direction but to sully the reputation of your opposite? Link it to failure wherever you can so as to make people receptive to what you hope to accomplish.
It's a chuckle, because our markets aren't free. Our leaders aren't libertarian. My blog has been a five year litany of complaint, and it hasn't been on the order of, "Things are moving my way, but not fast enough".
Ironically, that's been the Democrats. I always think of Ted Kennedy howling "Cheap!" at the Bush prescription drug giveaway. If that wasn't Bush moving policy kennedy's way, I don't know what is. But Kennedy was smart. He called "Cheap!" on Bush so that he could plant doubt and continue to urge people to push even further left.
This is one place the Democrats and the Left are very astute. The Right and the Republicans, not so much. Democratic politicians never come out and say, "I'm socialist!" even thought their actions are. Republicans will come out and say, "I'm capitalist!" and it poisons the well for them.
Kinda sad, that the best way to advance your cause is to fail to name it.
The Crash of 2008 proves what the Crash of 1929 proved before, that government regulation of markets is absolutely essential. It is irrational to deny that the deregulation of the 80s and 90s coupled with the lack of enforcement during the Bush years was one of the biggest causes of the crash.
The politicians that implemented the deregulatory policies may not have been libertarian (except Greenspan), but the failed policies are the core values of libertarianism.
I'm amazed that libertarians haven't given up. I know most Americans don't know much about history, so it isn't shocking that there are people who don't know that "free market" policies were the biggest cause of the Great Depression. But, history has repeated itself in our lifetimes. It is happening now. Only the most blindly ideological in nature can still be libertarians after this.
Markets do fail. They fail because of bad decisions. Regulation can make some decisions illegal, as I referenced in the main post. However, Government interventions rarely make things better. History? Ok, how about Smoot-Hawley. Did that government intervention end the Great Depression, or lengthen it?
The flip here is that only a blind idealogue can have endless faith in government. You'll have your day, though. We'll be monitoring the results.
Let's just look at it this way. Which economies around the globe are leading in economic growth? Look it up, and then see to which extent those economies are regulated. The answer is probably one you would rather not acknowledge.
More piling on? A daughter came home from school and said that several other students said that Bob Barr was a "communist".
Now where does stuff like that come from?
Barr, a communist? I think I have now heard it all. Did you ask your daughter where it came from? It would be most interesting to know.
There is gross misunderstanding of terms out there, to be sure. A common one I hear is that McCain is the fascist candidate and Obama is the socialist. They may well edge that way, but neither actually wants the complete destruction of capitalism. They want to skin the cat, sure, but keep it alive.
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