Monday, 16 March 2009

"the 40-year-old prevalent orthodoxy known as the Washington consensus in favour of free markets has come to an end"

Interesting piece, Gordon Brown's interview with The Guardian. Some *nice* sentiments included. It's remarkable how easy it appears to change the ideology of a generation in the blink of an eye.

He also claims that "the downturn marks the end of the era of laissez-faire government".

Thank the sweet baby Jesus if that's true.The Guardian


depresso said...

Pile of garbage. There was no "laissez-faire government". Both, the UK and the US are highly regulated economies. In a real laissez-faire economy, there would be no SEC to tell the investors that Bernie Madoff is OK. And in a real laissez-faire economy, there would be no bailouts of criminal too-big-to-fail banks. In a true laissez-faire economy, there would be no too-big-to-fail banks, because too-big-to-fail would mean too-big-to-exist.

Andrew Owen said...

It's true, neither are or have ever been truly laissez-fair... those were Gordon Brown's words.

Although the deregulation of the 80s and 90s did go a long way to create systems less controlled by the state... until that is that the system failed and great state control seems like the only option to many.

depresso said...

There was no deregulation. A real banking system deregulation would look like this:
* Anyone can start a new bank (no requirements for licencing and minimum capital)
* Anyone can issue money (no Fed or central bank monopoly)
* Everyone has to do due diligence (no irresponsible borrowing)
* Every failure would be punished (no bailouts, no "stimulus")

But what really hapenned was:
* The banks were artificially protected by the state's law so that there is no or low competition (difficult entry into the market because of licencing regulations)
* Failure was not punished (because of the lenders of last resort - the Fed and the central banks)
* The banks were told that they can invent whatever "product" they want to extract money from investors (which the politicians and media now call "deregulation" but which it isn't)

That's not deregulation. Deregulation implies responsibility and consequences for one's actions.
In reality, this was simple theft sold as "free market" to the ignorant masses.
We don't need more regulation. All this talk, that more regulation is needed is just to obscure the fact that you and I will be harrased by the state even more than we were until now while the banksters will continue legally stealing money from the taxpayers.

We need *true* deregulation as described above. Regulation creates monopoly. In a deregulated world, the banksters have no guarantees and there are no bailouts.

Open your mind. Think about it. While you dream about the good governments regulating, the real world governments are taking your money and handing it over to the banks.

Andrew Owen said...

I understand what you're saying.

I guess the problem is the hybrid nature of the system, you have the worst of both options: absurd bailouts, lack of any real consequence for irresponsible bankers & and you have national economies so dependent on over-inflated "privatised" and solely profit motivated companies without any accountability to the electorate.

So, in order to achieve a more pure system (either a state controlled, tightly regulated) or absolute free market we have to choose which direction we want to move things forward. For me, I'm reluctant to allow the free market freedom in an area that affects the lives of so many who are forced (through the nature of modern living) to participate. The free market is risky, companies come and go (which is good in some contexts) but profiteering off an industry that is so critical to everyone's functioning inclines me to more regulation. Free Capitalist endeavour can be focussed elsewhere in the economy.

Where You Are