World Economy At Cross Roads
Adam Smith and Karl Marx are two thinkers that shaped the post-monarchical political framework for the societies. More on these origins later…
[Edited inset: I have long argued that communism fell because it tried to restrain one of the basic instincts of human beings – that is, “to be selfish.” During the go-go bubble years of 90s and incredible resistance by Greenspan the minions of Clinton to financial regulation, I was on record saying that this will end very badly. For, the blind belief in ‘free markets’ ignores one other basic element – human propensity for fraud and excessive greed. The true economic prosperity lies somewhere in between. Where “in between?” I don’t know. But, what I do know for sure is that nobody really knows.]
Our debate on free markets – both on MMGL and here on TeluGlobe may be boring to some but it is not out of touch with reality and current affairs. In fact, the timing of this debate couldn’t have been more perfect.
I have been overwhelmed in more ways than one. First I am overwhelmed with work, which is why I am not able to post much here.
Second, with the little time I have, I was following the news and got overwhelmed with news that is gravitating towards a fundamental discussion on the very topic that is hot here: ‘free markets and the role of the government.’
Well, I do not want to over-dwell on this topic on my show. However, for those inquiring minds on this blog, I will direct them to a series of articles and videos in the next few days. A lot of this news is tied to Goldman, Wall Street ways, Financial reform bill on Congress and world trade.
Let me begin with a take on the Wall Street firms’ vision of the ‘regulation-free free markets.’ Paul Farrell provided a short history on American-style capitalism and “free markets” at Market Watch.
1. Birth of Capitalism, Adam Smith’s 1776 ‘Wealth of Nations’
Pure capitalism is the aggregate economic activities of greedy irrational selfish people. “Every individual … labors … great as he can,” but “neither intends to promote the public interest, nor knows how much he is promoting it. … he intends only his own gain … led by an invisible hand to promote an end which was no part of his intention.”
2. Alan Greenspan, Ayn Rand, Fountainhead and Atlas Shrugged
For decades Rand was Greenspan’s conservative guru: “When I say ‘capitalism,’ I mean a pure, uncontrolled, unregulated laissez-faire capitalism … the only system that can make freedom, individuality, and the pursuit of values possible in practice because capitalism demands the best of every man — his rationality — and rewards him accordingly … free … to go as far on the road of achievement as his ability and ambition will carry him.” Rand and her disciple Greenspan demanded total, unrestricted freedom for Wall Street.
3. Milton Friedman’s ‘Capitalism & Freedom’ powered Reaganomics
After 1981 Reaganomics defined conservatism: Grounded in Nobel Economist Milton Friedman’s conviction that “the government solution to a problem is usually as bad as the problem.” He preached pure Adam Smith capitalism, hated FDR’s New Deal, hated the Keynesian economics that Obama revived with the stimulus. Reaganomics ideology released the Kraken, gutted Glass-Steagall, created Wall Street’s too-big-to fail fat-cats, set up the 2008 meltdown, and exploded America’s massive debt problems.
4. Reaganomics capitalism must kill financial regulations
Today Wall Street’s myopic mindset lives in this unbroken 234-year history from Adam Smith to Friedman, Rand, Greenspan, Bernanke and Reaganomics. And today it’s coming to a head in this new “Clash of the Titans,” driven by Wall Street’s Scorched Earth obsession to kill all restrictions in Dodd’s reforms. This is the ultimate turning point, a grand battle to the death between the new Obamanomics and the resurgence of Reaganomics.
Why? Wall Street knows it cannot survive without Reaganomics’ ideological freedoms. Wall Street’s cash got Obama elected, got their Trojan Horses in his cabinet. But they never expected Obama to turn against them, starting with suing Goldman for fraud.
He opines on Wall Street’s version of Free Markets:
Wall Street’s goals are simple: Water down the Dodd reforms enough so that Wall Street can continue to: (1) evade securities laws, (2) avoid taxes, (3) minimize capital requirements, (4) increase leverage, (5) hide speculative risks, (6) maximize short-term profits, (7) avoid stockholder disclosures, and (8) manipulate regulators. Expect surface change, but little of substantive. Why? Wall Street needs to continue running the same scam on taxpayers in order to get their mega-bonuses. They have lost their moral compass, sold their soul to the devil, lack a conscience, have no interest in the public.
Couldn’t agree more.
Louis Black on the Tea Party nut-bags: