Over at Slate Magazine Jacob Weisberg, the author of “The Bush Tragedy” wrote about how the current financial crisis should put libertarian philosophy out of business. Here is what he has to say:
“A source of mild entertainment amid the financial carnage has been watching libertarians scurrying to explain how the global financial crisis is the result of too much government intervention rather than too little. One line of argument casts as villain the Community Reinvestment Act, which prevents banks from “redlining” minority neighborhoods as not creditworthy. Another theory blames Fannie Mae and Freddie Mac for causing the trouble by subsidizing and securitizing mortgages with an implicit government guarantee. An alternative thesis is that past bailouts encouraged investors to behave recklessly in anticipation of a taxpayer rescue.
There are rebuttals to these claims and rejoinders to the rebuttals. But to summarize, the libertarian apologetics fall wildly short of providing any convincing explanation for what went wrong. The argument as a whole is reminiscent of wearying dorm-room debates that took place circa 1989 about whether the fall of the Soviet bloc demonstrated the failure of communism. Academic Marxists were never going to be convinced that anything that happened in the real world could invalidate their belief system. Utopians of the right, libertarians are just as convinced that their ideas have yet to be tried, and that they would work beautifully if we could only just have a do-over of human history. Like all true ideologues, they find a way to interpret mounting evidence of error as proof that they were right all along.”
He goes on and on without really saying what in the free-market caused this problem. He only cites the financial crisis in 1997-1998 as a “deregulated” market and that is the example of the problem. We have not had in the history of the world a free-market banking system. He is right about this but it doesn’t take a genious to see that as you move towards one way or another the freer the market the better we have been.
Libertarians (or even socialists) who say that, “Our system has never been tried. Give us a chance” is not distinguishing themselves from each other. Anyone who has a crackpot theory upon anything could say this. What we must measure is the movement from left to right or right to left.
If Mr. Weisberg can prove to me when a right to left movement in the banking system worked then he should say so. He doesn’t because all the movements to the left in the financial institution happened a long time ago. Those things should have prevented this problem, but it didn’t.
When the Soviet Union moved left to right and freed their markets. They were much better off. Libertarians should never be ignorant of this. In fact, every libertarian should understand and read economics. The answer that “free is good” or “everyone one should leave us alone” are fine catch phrases to recruit people but the people we are dealing with, like this author, believes that we need to make the market less free because these people left alone are no good.
This should be a good tell for Libertarians on how to conduct yourselves against these people. I would argue more against his ideas but he doesn’t have any. He is the guy who says no and thinks blanket regulation works. Instead, we should read this article to better ourselves, which includes all Conservatives, Libertarians, and Anarcho-Capitalists.
The rest of his article is here.