There are all kinds of articles and arguments that could be linked to, but this sums it up nicely ... An unregulated market does NOT work. We have 19th century history as proof of this: constant, painful swings of boom and [massive] busts. The question is Why? and the answers lie in directions that free market neo-conservatives simply do not want to hear. Regulations are not created out of the ether. No human says, in front of Parliament or Congress: Some time in the future the derivatives market will decide to repackage debts into marketable tranches - the CDO - and we must create a regulatory structure to deal with this potential idea. This is an impossibility, no human can foresee the future. So regulations - laws - are (over 90%?) created after the fact; laws are mostly created to prevent a situation from reoccurring by establishing acceptable behaviors in an attempt to correct past mistakes. Knowing this, fully free-market economies do not work because the belief that the market will self-correct and punish poor behavior only happens after the damage to the markets has been done - the fear of penalty is reduced to awaiting the discovery of the market reaction from the results of the action, rather than discovering the action itself. That may seem to be a minor difference but the psychological effect is enormous: the former allows criminals a greater expectation of getting away with it because you are examining a more complex system to look for clues...if you are even looking for them in the first place. Enron, Tyco, HSBC, Barclays, etc etc etc prove this theory: when operating at a systemic level with lax oversight, the white collar criminal has a great impetus to actions of greed due to the expectation of their misdeeds going unnoticed, as they expect the mass, inertia and complexity of the markets to hide their crimes. In short, the free market movement seems to always discount the factor of HUMAN GREED into their equations - they always forward an agenda of people acting towards each other in perfect harmony, with enlightened interests and self-interest, all working together to advance their wealth. Too bad they live in a fantasy world (then claim that liberals do!) - there are many humans out there who will gladly take advantage of any sliver of opportunity given them, if it means money in their pocket, and the rest of society will pay (sometimes dearly) for their actions. In a non-perfect world we must have regulations to (hopefully) push people to act in socially-acceptable ways - we can hope one day that they will no longer be necessary, but that day is not coming very soon. -- Anonymous Coward [1] --- [1] No, really: forums.theregister.co.uk/forum/1/2013/10/15/nobel_prize_for_economicts/
Posted on: Tue, 15 Oct 2013 20:17:03 +0000
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