Not quite free at last

October 22, 2008

If I wrote this, you’d consider it just another rant from a libertarian-leaning crank. But it’s the opening of a Washington Post editorial:

IS THIS the end of American capitalism? As financial panic spread across the globe and governments scrambled to contain the damage, reality seemed to announce the doom of U.S.-style free markets and President Bush‘s ideology. But this is wrong in two ways. The deregulation of U.S. financial markets did not reflect only the narrow ideology of a particular party or administration. And the problem with the U.S. economy, more than lack of regulation, has been government’s failure to control systemic risks that government itself helped to create. We are not witnessing a crisis of the free market but a crisis of distorted markets.

This shouldn’t be an argument pitting regulation fans agains anti-regulation zealots but an effort to determine when and how to regulate. If we get too deep into the regulate-everything mode, that will have as many dire consequences as the complete absence of government.

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