A friend recently called my attention to Matt Taibbi’s Rolling Stone Article, “The Great American Bubble Machine.” Read it here.
Taibbi knows little about economics, and comes down on the wrong side of the most important question raised by our economic crisis – freedom or government?
For example, he writes: “an extremely unfortunate loophole in tbe system of Western democratic capitalism, which never foresaw that in a Society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.”
This is bullshit. We should not condemn free markets until we’ve given them a chance.
His understanding of the causes of the Great Depression is completely anemic (no mention of inflationary monetary policies), and his explanation of how Goldman cheats the world makes no sense.
Matt Taibbi’s worst offense is calling for more regulation to “protect” us from the likes of Goldman. Regulation is exactly what got us here.
Sure, if banks commit fraud we need the government to put them in jail, but beyond that, all we need to do is let the fuckers go bankrupt when they get caught holding loans which should never have been made.
It’s completely schizophrenic for the government to subsidize bad loans (HUD, Freddie, Fannie), then hand the banks billions of tax-payer dollars (TARP), then say the problem is too much freedom. In a free market, irresponsible companies go bankrupt.
So Taibbi fails.
He does deserve praise for a couple things though – demonstrating the pervasiveness of Goldman Sachs alumni throughout our government and the banking world at large, and calling attention to Goldman Sachs, and evil, evil company. His criticism should be directed to their influence over the Federal Reserve, the U.S. Treasury, and policies which transfer our wealth to likes of Goldman.
One very good point he makes, is connecting Goldman to Cap & Trade – the hideous bit of legislation which just passed our Congress in order to “save” us from Global Wharming. It’s another big scam.
See Also: Taibbi responds to Goldman’s criticism of his article.
Economist Thomas DiLorenzo (mises.org/story/3446): “The current economic crisis, which was instigated by the government’s central bank and its boom-and-bust monetary policies, among other interventions, has once again been blamed on “too little regulation” and too much freedom.”
We don’t need government to prevent certain types of voluntary exchanges from happening. We need them to let companies like Goldman go bankrupt when they make irresponsible ones.
Marc Faber (. . . somewhere on youtube): “The economic crisis and the financial crisis is a direct consequence of continuous U.S. government intervention into the economy through fiscal and monetary policies that have been designed to never have a recession.”
wow… very harsh words for the bankers. I agree though, fuckers should go bankrupt when they fuck up.
giving them unlimited access to taxpayer funds is bad policy.
you should give a lecture on economics
Did you not read Taibbi’s article? His whole point is that you can’t have a free system when a profiteering corporation is acting as government. Of course Goldman’s should have gone bankrupt. Of course it didn’t because the government financial arm is, and usually has been, staffed entirely with Goldman people that rig the system in Goldman’s favor. That is not freedom or free markets. That is an oligarchy. We gave free markets a chance and what did they do? They bought the government for pennies and then had the government turn on that taxpayers to fund their larceny and gambling. The future? It’s the super, ultra, mega rich with the government in their pocket vs. the rest of us.
Thanks for the comment, Paxalot. You seem to say that corporatism is a natural consequence of free markets. Even if this is true, which I disagree with, it’d be even worse under socialism, which is where we are moving. The more power we give to government the more they can play favorites in exchange for political favors.
I think you agree with me that true free markets are the best system for general prosperity.
Taibbi does not call for free markets. His explanation of the various bubbles includes types of trading which Goldman, according to him, should not have been allowed to make. This is an implicit call for yet more government interference.
What we need is for government to stay out of it (aside from enforcing voluntary contracts and punishing fraud). Goldman should be allowed to buy and sell whatever other people want to voluntarily sell or buy from them. They should simply be left to face the consequences of their irresponsibility.