Wednesday, September 17, 2008
Après moi - the government bailout
It has been once again proven in the cause of this present financial turmoil that the modern state cannot allow systemic economical failure. Moral hazard is a feature of the system, not an external bug. Profits will always be for privatization and losses, if big enough, will always be socialized. This empirically proven state of affairs will of course not prevent the adored corporate leaders to lecture about the negative effects of state intervention once the good times have returned. Business has very short and selective memory. So, in the last analysis our modern market economy is founded on the support of the modern social democratic state without which it could not thrive. It desperately needs strict regulation and oversight that guarantee a certain basic stability and predictability. It could not even be otherwise given our shortsighted and greedy human nature. Of course this also provides the assorted libertarians and other free market fundamentalists with a permanent escape clause: the free market will never be completely free, it simply cannot be so - there will never be uncontaminated laboratory conditions for capitalism, so the libertarians will always be able to say that without that contamination of public intervention, the system would have worked "perfectly". Oh dear, how much this intellectual nonsense reminds me of Marxism-Leninism - no falsifiability, pure intellectually immature circular logic supported by ideological fervour and nothing else.