Is the United States no longer the global beacon of unfettered, free-market capitalism?
In extending a last-minute $85 billion lifeline to American International Group, the troubled insurer, Washington has not only turned away from decades of rhetoric about the virtues of the free market and the dangers of government intervention, but it has also probably undercut future American efforts to promote such policies abroad.
“I fear the government has passed the point of no return,” said Ron Chernow, a leading American financial historian. “We have the irony of a free-market administration doing things that the most liberal Democratic administration would never have been doing in its wildest dreams.”
“For opponents of free markets in Europe and elsewhere, this is a wonderful opportunity to invoke the American example,” said Mario Monti, the former antitrust chief at the European Commission. “They will say that even the standard-bearer of the market economy, the United States, negates its fundamental principles in its behavior.”
Mr. Monti said that past financial crises in Asia, Russia and Mexico brought government to the fore, “but this is the first time it’s in the heart of capitalism, which is enormously more damaging in terms of the credibility of the market economy.”
In France, where the government has long supported the creation of “national champions” and worked actively to protect select companies from the threat of foreign takeover, politicians were quick to point out the paradox of what is essentially the nationalization of the largest American insurance company.
“Today the actions of American policy makers illustrate the need for economic patriotism,” said Bernard Carayon, a lawmaker of President Nicolas Sarkozy’s center-right governing party, UMP. “I congratulate them.”
An appropriately funny comment from MikeN: “If it moves tax it, if it keeps moving regulate it, and if it stops moving subsidize it.”
Ideologues, who abandon pragmatism and who approach life’s challenges without a single shred of common sense, tend to leave a long trail of destruction and failures behind them. Which is probably why you need to be 35 years of age before you can be a President.
We haven’t had “unfettered, free-market capitalism” since at least 1933.
I don’t think we ever had a free market economy. For better or worse there’s always been some level of government intervention.
it’s been dead. Because less regulation only leads to corrupt companies who take advantage of consumers and force themselves into a bankrupcy where the government gets to bail you out , and CEO’s get millions to go away
It’s also what the Labour Party had to do with Northern Rock. Parochial Americans may think that’s a heavy metal band; but, it moved Britain’s Left into bailing out a bank led by their native version of Countrywide Mortgage.
I’m not sure what is worse. Having the government bail out companies with my tax dollars, especially with a republican in the white house is a sad though. Having companies touting free markets and too much regulation, and then running to them for cover makes me very mad.
I say, let these big financial institutions fail so that the next time around this doesn’t happen. I know, I know – the world will come to an end if we let that happen. My problem is that i’m a free marketer at heart – which means all the time, and not just when it’s convenient.
#6 – “I say, let these big financial institutions fail so that the next time around this doesn’t happen. I know, I know – the world will come to an end if we let that happen. ”
That is exactly why politicians are terrified of letting these banks fail. As long as the public is afraid of letting financial gamblers reap what they have sown, the fat cats can use the US Treasury as a fail safe. As soon as they fail and the sun rises the next day, the perceptive will see the Emperor is naked.
Capitalism died on December 23rd, 1913.
If it moves tax it, if it keeps moving regulate it, and if it stops moving subsidize it.
Capitalism always needs to be protected from excesses of the very forces that drive it. One of the problems in this case was that the growing bubble obscured an otherwise anemic economy that that no one in power wanted to acknowledge. The President was too busy taking credit for the prosperity that turned out to be just a cruel mirage.
On top of everything else, with the national debt already above $9.6 trillion, our government is in a very weak position to deal with an economic crisis of these proportions. But the good news is that by virtue of our size, we have the power to drag everyone else down with us, and that still gives us extra bargaining power to attract foreign investment from people who want to prevent a worldwide recession.
If it was only a recession, there would be no worries. Look around, this is a meltdown on global scale. Our very own Financial Chernobyl.
The world everyone is looking for but does not want to say is depression.
We need more regulation?? Like Sarbanes-Oxley, right?
We need less regulation and more transparency in government and business.
“Is free-market capitalism dead?”
One can hope.
(Never really existed…)
“Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.”
John Maynard Keynes
And that’s by the man that helped found the World Bank and IMF !
The trouble with Free-market capitalism is that people want it to an Be-All-End-All system. But it’s not even a system. It’s just free entreprise with carte-blanche. Capitalism HAS to be regulated, otherwise it bites it’s own tail…
And also the “mirage” of America’s free market it’s, a “Mirage”. US government is always interfering with the economy. The market has never been free: tax-payers dollars have always supported the influence of the USA over the world. Since the Panama canal and the military hegemony of USA the economy has been developed under the umbrella of proteccionism.
What now people? you want the military (and your tax-payer dollars) to go and “secure” oil-producing countries because of the economy and then shout foul when your tax-payer dollars are used to prevent bankrupcy of a private company!! That’s a paradox. Straighten your ideas…
Those that live on a PAYCHECK, understand a small trick..
When you BORROW, enough to get BY, it still has to be PAID.
UNLESS you cut back on something, IF’ you can CUT BACK(which means you had excess in the first place) You will still OWE.
Like having a Credit card to PAY your bills when you are alittle short. YOU MUST BE ABLE TO PAY IT BACK. If you cant DRAW from some place, you will PAY MORE in interest then the original BILL.
To many companies are raising to COVER THEIR BUTS, but then FEWER consumers are BUYING, so they RAISE the price again…IT DONT WORK THAT WAY.
I see corps advert on BBAL teams, Tennis, Volley ball, and sports racing, GOLF, and cartons of milk…THIS COSTS MONEY.
When it AINT coming in, you CANT spend it, UNLESS it will give back 10 fold.
Capitalism is FINE, IF you let the CONTROLS WORK. IF someone BAILS THEM OUT, its NOT WORKING. They have to LEARN when to CUT BACK. When to take it in the SHORTS for the LONG TERM.
When was the LAST time those on TOP, USED to split the profits after..
EVERYONE WAS PAID
TAX was paid
BILLS were PAID
STOCK HOLDERS got a SMALL bit..
IF they arnt making a PROFIT those on TOP are the ones to get hit, as well as the STOCK HOLDERS.
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Another point is that WHAT nation in the WORLD
When they EXPORT GOODS, MATCH the prices NATIONALLY.. As far as I know..only the USA.
WE also IMPORT AFTER WE SELL all our WOOD/Metals to china, FROM CANADA and ADD a 25% tariff.
Think about that.
we export the wood, RAISE the price of wood to MATCh the price we are selling it for ACROSS the nation. THEn we BUY it from canada and ADD a 25% TAX.. And you wonder WHY the housing market was going DOWNHILL..
edwinrogers Ideologues, who abandon pragmatism and who approach life’s challenges without a single shred of common sense, tend to leave a long trail of destruction and failures behind them.
Rarely does something get said on a blog comment that has any literary merit, let alone succinctly sums an universal truth. However, I think that line really does both well!
Just in case people missed it before: Ideologues, who abandon pragmatism and who approach life’s challenges without a single shred of common sense, tend to leave a long trail of destruction and failures behind them.
If ever young person was taught that from a young age, I think the world would truly be a better place!
“If ever young person was taught that from a young age, I think the world would truly be a better place”
really??
And what is your answer to BUSH??
IF everyone held the truths they learned to heart, and held them for life, they would be good people.
But as you can see, even a RELIGIOUS back ground, does not, lead to a religious life, even for the BASIC TENANTS.
ECA: WHILE IT IS very true that that NOT EVERYONE will take what they learn to HEART. That doesn’t mean it is NOT WORTH TEACHING them things… I didn’t say the WORLD WOULD BE perfect, just a BETTER PLACE.
It died the minute humans entered the picture…
19,
still THE SAME POINT.
Can you explain BUSH, and others we have representing us?
Many of these PEOPLE’ have gotten the backing of religious groups, and for SOME ODD reason..they like them.
FOr a conservative president he has HAD 2 terms.
You have a good point. but WHAT happens if someone LIES?? to get a position he does NOT deserve??
Old saying:
Those that KNOW the job and DONT WANT IT, are rulled by those who WANT IT, but dont KNOW IT.
Unless we can elect THOSE that KNOW how the position WORKS. If they want it or NOT..we will be controlled by THOSE that want it for OTHER REASONS, and dont KNOW HOW IT WORKS.
“We need less regulation and more transparency in government and business.”
So you’ll want regulations enforcing this openness. With regulators going around making sure corporations are being open and are not hiding anything. And of course there will be criminal laws for when CEOs allow cover-ups and fail to follow the regulations. And of course several will be indited, and a few will be convicted.
Wait, I thought you wanted less regulation?!
The Free Market is a myth. A totally free market is nothing more than unrestrained brigandage, roving bands sacking and looting, raping and pillaging the countryside. Ever since there have been rules and laws, the market has been restrained in some way. As civilization advances, there are more and more laws, rules, standards, etc., all the way from standard weights and measures to “generally accepted accounting principles” (a phrase we see a lot in the news mostly when corporations have been playing fast and loose with those same principles).
As time goes on, these tens of thousands of factors get pushed and pulled in various directions: credit gets easier — oops, a panic, so credit gets tighter; in the absence of labor laws businesses treat their workers shabbily so — unions are born; and so on in a thousand different ways. Sometimes even reforms come back to bite in unexpected ways. For example, for at least the last 30 to 50 years, employment laws have added so much to the cost of hiring a single American that it’s cheaper to make one shift work 60 and 70 hour weeks than to actually hire enough workers to get the work done in a reasonable time. And even cheaper just to move the work to (name your poison — Mexico, Dominican Republic, Indonesia, Vietnam, India, China — just look at the labels wherever you shop for clothes).
When I look at how little this country actually makes or does or thinks (how many PhDs awarded by U.S. universities now go to people born in the U.S.?) for itself, it’s astounding the whole house of cards didn’t fall down around our ears decades ago.
#22, […]yet you got to protect the little guy. Forget the ‘isms, use common sense. The kids have a right to a good education, the sick should have a right to health care, etc… If your society has no basic values but wealth, or lack there of, the end is definitely near.
You really don’t have a clue do you? Let me state it for you again:
The government cannot afford to do that.
It is this attitude that is part of the reason we have the problem we have now. If you don’t understand that, you need to do a little more research on the types of loans these banks made – government-mandated loans to people who could not afford to pay them back just to say that everyone owned a house and not just “rich” people. These were most of the regulations that got slashed — those that dealt with assuring the recipient could pay the loan back.
Yes, there were other reasons but this is the one that started the ball rolling.
It’s time we admitted it — if the government had let the banks make the loans that made sense instead of forcing them to make bad ones “to help the little guy,” we wouldn’t be in this position.
You can’t do business on the basis of “need.” You have to do business on the basis of who can pay you back.
I am still pissed off about the bailouts, too. Yes, I would have let them fail and taken the consequences that came with it.
OH YA! I am SORRY that I forgot to RANDOMLY capitalise words in my LAST post. I MEANT too….
These BAILOUTS are just examples of TAKING FROM THE NEEDY TO GIVE TO THE GREEDY !!! Robin Hood in REVERSE !!! Time to SOAK THE RICH, they have STOLEN ALMOST ***ALL OF THE MONEY*** !!! Restore the STEEPLY PROGRESSIVE INCOME TAX !!! Re-Animate the ANTI-TRUST DIVISION OF THE JUSTICE DEPT, AND ***BUST UP THE CARTELS AND MONOPOLIES*** !!! Then their MIGHT BE SOME COMPETITION IN THE MARKET PLACE !!!
Hey, I’ll give someone $50 if they make a slight change to the class coms_mid_alt on the style sheet…. just add: text-transform:lowercase;
If people can’t learn to capitalise properly they should lose the privileged.
#25, Liberty,
The government cannot afford to do that.
What do you mean the government can not afford to do that. I suggest you go back to grade 6 Civics class and learn a little bit. WE are a society. We are NOT just individuals here to take what we want, when we want, to the detriment of every other individual. It is the health and strength of the individuals working together that determine the strength of the society.
If we abandon society’s needs to itself, then we abandon society. We need doctors today; we will also need them tomorrow. The same with engineers, truck drivers, and tomato pickers. People do not become professional health care workers, or engineers, truck drivers, etc. without some education. It is society that provides that education, as part of the infrastructure, to make it all work.
… you need to do a little more research on the types of loans these banks made – government-mandated loans to people who could not afford to pay them back just to say that everyone owned a house and not just “rich” people.
Can you point to ANY government mandated loan to anyone to buy a house that could not pay back? I didn’t think so. There are regulations that institutions may not discriminate by refusing to make a loan, but that is based upon their race/sex/religion, not ability to repay.
These were most of the regulations that got slashed — those that dealt with assuring the recipient could pay the loan back.
Nope. Those regulations never existed in the markets currently having difficulties. The difficulty arose after unregulated institutions were allowed into the market. This allowed investment bankers and independent brokers to sell mortgages as well as established banks. Those are the loans in trouble.
Regular banks, trust companies, savings and loans. and credit unions are generally healthy. It is the investment banks, outside of regular banking regulations that are in trouble.
Yes, there were other reasons but this is the one that started the ball rolling.
Wrong again. The current crises happened because of layoffs caused by so much manufacturing moving overseas. As many lost their jobs they couldn’t afford their homes. A secondary factor (and in combination) is those suddenly facing huge unexpected medical bills. The sudden influx of overpriced homes on the market depressed the market so mortgage holders could not get their investment back. The actual number of defaults because of not qualifying in the first place is actually low.
It’s time we admitted it — if the government had let the banks make the loans that made sense instead of forcing them to make bad ones “to help the little guy,” we wouldn’t be in this position.
The government has never forced any bank to make a loan to anyone. The sole restriction they attached was that the loans not be discriminatory. Regulating in fact go the other way where banks are forced to defend their poorer loans as part of their solvency. Even Student Loans, which are government insured, are not being forced on banks.
Yes, I would have let them fail and taken the consequences that came with it.
Ah yes, another “damn the torpedoes, full speed ahead” kind of guy. Have you ever heard of a guy named Herbert Hoover? He was President back in 1929. While personally quite sympathetic to those injured by lay offs and businesses closing, in fact he donated a fair portion of his personal wealth to those hurt, he had the same philosophy as you. And the entire country, as did most of the world, went onto a very deep financial depression simply because he believed that the government had no business in running the country. Most historians and economists believe that if Hoover had acted to save the banks, we would not have had the Great Depression in 1931.
So while I agree that government bailouts are very undesirable, they are necessary sometimes. This is just another know nothing comment by someone influenced by another know nothing agitator.
BTW, there never has been a true “Free Market Capitalism” since mankind came out of the caves. Government has always supported those who were closest or favorites of the King.
#22- I’ve long had the same belief, but I would narrow it down to one root cause- human nature, and more specifically, selfishness. Greed can be a great motivator but, unchecked, it can lead to behavior damaging to others. Conversely, too much restraint can also have negative consequences.