Big media outlets are ignoring the quiet revolution that is taking place across America. Politicians don’t talk too much about it for obvious reasons. This revolution is building incredible momentum. It now threatens the legitimacy of every level of government, the viability of government management of society, and the credibility of career politicians, assuming someone still has any faith in them.
In the nineteenth century, the legal profession was open. There were no mandates on the kind or duration of education a person had to have. No law restricted anyone from offering his services. The only complaints were from lawyers who wanted to force “higher standards” upon the market.
No sooner is John Maynard Keynes declared irrelevant for modern economics than some establishment figure declares him the god of the age. It happened again, in the pages of Fortune Magazine (August 17, 1998). The writer was MIT’s Paul Krugman, one of the most famous economists alive. His article, “Why Aren’t We All Keynesians Yet?” was a hymn of love to the man who made government management of the economy a worldwide practice.
As the world financial system entered a state of collapse, commentators said that Russia had traded the shortages of socialism for the bank runs and financial panics of capitalism. In fact, modern finance and banking are built on unstable, socialistic foundations.
With huge segments of the world economy mired in depression, can we conclude that capitalism has failed or that the market behaves irrationally? That seems to be the consensus among many commentators, so we hear a wide range of calls for government intervention to patch things up.
Speaking before a Congressional committee, Alan Greenspan stepped back from his discussion of the newest international currency crisis to reflect on the gold standard of the last century. He noted that bad judgments and distortions in price had a way of working themselves out very quickly. Interest rates would rise and fall to reflect shifts in capital flows and thus minimize the losses associated with economic change. Imbalances corrected themselves.
The phrase of the day is “moral hazard.” It’s something everyone seems to think is a bad thing, but few are willing to do anything about, certainly not Alan Greenspan. So far, he’s on record backing the Mexican bailout, the Asian bailout, the bailout of Long-Term Capital Management, and more IMF funding, despite the financial dangers all these create down the line.
The logic of the market is predicated on the pervasive and glorious inequality of man. No two people have the same scales of values, talents, or ambitions. It is this radical inequality, and the freedom to choose our own lot in life, that makes possible the division of labor and exchange.
