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January 01, 2009

Happy Dean Baker New Year!

Here's Dean Baker making an incredibly obvious and important point that professional liberals seem completely unable to absorb:

The extraordinary financial collapse of recent months has been commonly described as a testament to the failure of deregulation. The events are indeed testament to a failure—a failure of public policy. Blaming deregulation is misleading...

The less-versus-more framing of regulation supports the premise that there is in principle an unregulated market out there and that some of us wish to rein in this unregulated market while others would leave it alone. This is consistent with the idea that large inequalities in income distribution just happen as a result of market forces. one is really talking about an unregulated market—rather we are all just talking about whom the regulation is designed to benefit. Distribution of income has never preceded the intervention of government.

The government is always present, steering the benefits in different directions depending on who is in charge. Accepting this view provides a political vantage point much better suited to the case for progressive regulation. After all, conservatives want the big hand of government in the market as well. They just want the handouts all to go to those at the top.

The rest.

—Jonathan Schwarz

Posted at January 1, 2009 11:29 AM

Yeah, I've been reading this guy for a while now, and I must say I like him much better than Saint Krugman.

Posted by: abb1 at January 1, 2009 12:58 PM

Karl Marx said much the SAME thing in 1830. Good thing WE are all such quick studys.

Posted by: Mike Meyer at January 1, 2009 01:18 PM

I would blame more of it on an utter failure of corporate governance. I read a piece in the NYT about WaMu and their insane loan practices pushed feverishly by the CEO. What was the damn board doing? The board is supposed to be making sure the CEO (who walked away with $100M in salary and bonuses during his time) has a sane and sustainable business plan and is working in the interests of the company and the shareholders. Clearly the board of WaMu was an abject failure but nobody there has any personal liability for their screwup.

Ultimately, government regulations are a horribly poor and clunky substitute for self-interest.

Posted by: Fritz at January 1, 2009 03:39 PM

ultimately, self-interest is a poor and clunky substitute for extrasolar supermessiahs with limitless strength, infinite knowledge, and flawless moral compasses.

Posted by: hapa at January 1, 2009 04:55 PM

abb1: AGREED!

Posted by: Mike Meyer at January 1, 2009 06:11 PM

Not only do professional liberals refuse to acknowledge this obvious truth, the entire libertarian thought is also built on denying it. I always ask about this when I hear the very common "I am a social liberal but a fiscal conservative" snake oil

Posted by: jawad at January 1, 2009 06:26 PM

jawad, check out, for instance, Arthur Silber. Some libertarians know there is no free market.

Posted by: Save the Oocytes at January 1, 2009 06:33 PM

I will check out Arthur Silber. It is not enough to say that there is no free market. Corporations and the ruling class create this lack of freedom to undermine democracy and to steal. Should we use our political power to keep them in check? If the answer is "Yes" then Silber is a good old liberal and not libertarian (provided he is socially liberal too). If the answer is "No" then he is a standard libertarian dupe.

Posted by: jawad at January 2, 2009 10:23 AM

abb1, MikeM: Dean's blog is pretty good. You can also download his book "The Conservative Nanny State" for free. In that book he expands on several of the themes presented in his essay.

Fritz: The Board? Surely you jest. Did you never read anything by CW Mills? Are you not aware that most corporate boards are composed of the same type of people promoting their common interests (i.e., fellow CEO's)? Are you not aware of the changes in corporate governance (that would be the law) over the last several decades that has promoted exactly this kind of behavior?

Which, by the way, is exactly Dean's point.

Posted by: bobbyp at January 2, 2009 10:46 AM

bobby -- that was also my point. Current models of corporate governance have nothing that puts anyone's ass on the line when boards countenance fraudulent or even just stupid CEO behavior. Corporate boards are a joke. Unfortunately I don't see this getting reversed any time soon. Instead I hear calls for more government paperwork for every market under the sun.

Posted by: Fritz at January 2, 2009 12:56 PM

Well, put me in the camp of libertarians that know that there is no free market ( that has always been the case). Oh and I love Dean Baker.

Posted by: nj at January 5, 2009 07:14 PM

Well, put me in the camp of libertarians that know that there is no free market ( that has always been the case). Oh and I love Dean Baker.

Posted by: nj at January 5, 2009 07:14 PM