If I hear “This whole mess is caused by greedy capitalism run amok” one more time, I am going to scream. I don’t know how many times I have seen the terms Laissez Faire and greed together lately.
First of all, there is a huge difference between Laissez Faire and corporitism. Laissez Faire puts the emphasis on competition. Businesses thrive and fail on their own merits. This is rarely ever mentioned in government circles, what is usually put into place is corporitism. That puts the emphasis on protecting a certain business or sector. Often times, this is masked behind “protecting” the consumer by various means. In any case, a company or group of companies benefit at the expese of all of us. This is what Republicans are famous for. People on the left tend to mistakenly refer to those things as “free market” policies. Here’s a hint, if it benefits a business, it isn’t free market. Businesses hate free market reforms, it means less money for them.
The next thing I would like to address is this; if you think that government regulations had nothing to do with this debacle, you’re delusional. People will always try to make as much money as they can. Is that greedy? When you sell your house, do you sell it for as much as you can get? When you work, do you pick a job that benefits you the most? (Benefits and profits are essentially the same thing, see here for an explanation…) Congratulations! You’re a greedy capitalist!
People work on Wall Street to make money. That sounds obvious, but think just a little bit, people come from all over the world to make big bucks in NYC’s financial sector. Think what you want about those people, but their activities have enormous repercussions throughout the world. Their “greed” propels most of the jobs in the US and probably the world.
You can’t legislate away greed. They will do what makes them the most money for the resources that go into it (capital, time, etc.). Government regulations have shaped what is profitable and generally distorted the entire financial sector. Without going into too mucuh detail, the existence of Fannie and Freddie, tax codes that pertain to real estate, mandates to lend to certain groups of people, and of course the Fed’s monetary policies over the last decade have all come together in the perfect storm.
Once again, this mess can be laid at the feet of government meddling. The economy is not a machine that you can steer. A better analogy would be that the economy is like water flowing downhill. You can try to divert it, and you can try to make it work for you, but it will flow all the same. What we are seeing is the flooding caused by government diversions and dams. The bailout will make things worse long term, who knows what unintended consequence will come out of this intervention. It’s best to allow things to die a natural death, clean up after, and then get back to work without government distortions in the market…
PS. Im not saying that the people and companies involved in this collapse weren’t idiots. Companies make mistakes every day. Most banks did not make these mistakes, but a handful of large ones did. Whenever you hear the phrase “too big to fail” you can be sure we are operating under corporitism. The banks that exposed themselves to this kind of risk should go under, no bailout should be considered..