The Death of Capitalism

Daniel Gross writes:

Just as happened in 1932, it's possible that the Republicans' incompetence and bullheadedness in managing a financial crisis could lead to Democrats controlling both the White House and Congress.

This sentiment should strike fear in the heart of every free market advocate who reads it. Before the Great Depression, America had a classical free market economy. America was almost a libertarian utopia. After the Great Depression, America slowly became a socialized paternalistic big government nanny state.

If the financial crisis gets worse, and the Democratic party increases its political control, capitalism as we know it may not be able to survive. Saving capitalism should be the goal of all those who ideologically believe in free markets. If that means a bailout needs to be passed, then so be it.

Update: Megan McArdle says it better than I do:

It is worth noting, in answer to the libertarians who are wary of government intervention in the economy, that if there is a serious crash, we will get even more government intervention in the economy--and intervention that is much less to our liking. That cost has to be weighed in your assessment.

Great Depression of '09

Irwin Kellner writes:

...this is not a depression in any way shape or form.

While I am at it, I would like to take issue with the almost ubiquitous use of the word "bailout" to describe the government's rescue package.

Folks, this is not a bailout of anyone, not Wall Street, not Main Street, and certainly not the so-called "fat cats." It's an infusion of liquidity, designed to unclog the financial markets. In doing so, it will benefit everyone, business and consumers alike.

Being in a depression and being on the verge of going into a depression are 2 different things. Those who are talking of the depression are warning that the United States is on a verge of going into a depression. Let's hope that they are wrong, but I fear that they are right.

Milton Friedman on the Great Depression

http://reason.com/news/show/129017.html

...it is striking how free-market economics have no place in the current debate. They are not seen as a credible response to a Wall Street crisis, even by the presidential nominee of the Republican Party, who is angrily attacking the "greed of Wall Street." Contra Naomi Klein, an economic shock has sent Republicans skittering away from free-market theories; the last thing the party of small government seems interested in letting markets work.

Unfortunately, some libertarians and conservatives need to brush up on the teachings of Milton Friedman.




In case anyone misunderstands my point, Milton Friedman endorses the view that it is necessary for Federal Reserve to prevent contractions in the money supply. That is what financial crisis and negotiations over the bailout are all about.