"He will put the sheep on his right and the goats on his left."
Matthew 25:33

Friday, May 29, 2009

Free Markets, or Central Planning

History has a way of repeating.  The cartoon here is from the 1930s and seems eerily applicable to today.

The Wall Street Journal published an article yesterday that tracks the progress of the Obama administration to create a "single regulator" for the "banking system.  (also this article)  This is consistent with the view that Wall Street "greed" and poor oversight allowed an unseemly orgy of "predatory" practices, which caused a bubble, which collapsed. (examples here and here and here)  Proper regulation is intended to "fix" the problem.

In fact, the Federal government and its proxies caused both the bubble and the collapse.  Regulation is another word for central planning, and that very regulation is what caused the meltdown.  Moreover, the continuing and expanding government interference in markets is making things worse.  (Examples here and here)

Do we want to give the government that caused the economic meltdown yet more power to create an even bigger meltdown?

The Obama administration clearly believes that Central Planning is required, and is using the "economic crisis" as an example of "market failure".  His old plan and his new plan are both full of ideas for how government action can "rescue" the economy.

How can we ignore the hard lessons learned from recent experience in every planned economy from Zaire to the Soviet Union to Cuba?  Planned economies do not work.  The economist Von Hayek wrote extensively on why.

More power for regulators will always be costly, and seldom is beneficial.  The power tends to corrupt the government and chips away at our freedom.  Regulations promise "safety" that they cannot deliver.

The founders said it best - those who trade their liberty for a little security will lose both and deserve neither.

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