I'm not a free market capitalist. I don't think I'm a socialist, or a communist, exactly. But I don't believe that the market should regulate itself (and I think if you're watching this stuff going down right now--Fannie Mae and Freddie Mac, and AIG--you might concede that regulation would have prevented some of this), because I don't believe the market can compensate for greedy monsters. Or can be compassionate. I can't talk economically about this, because I'm not economist, but even I can see that unchecked greed (and little to no regulation of that greed) has led to at least part of this disaster. (That and the very fucked up idea that housing prices would never ever ever in the entire history of the world drop. Erm, is it weird to say that this seems self-evidently stupid?) The desire to leave markets unregulated is really a desire to allow people with power and money the power and money to make the rules up as they go, and the world be damned. It leads to bad decisions, and bad things happen that make the economy crash around us.
Greed is so troubling. It's as troubling as power. Both corrupt absolutely, I'm sure of it. It's okay to want to make a profit, it's okay to want a nice life, and it's definitely okay to make money. But there is a line, and that line is crossed when you'll do things that will hurt people in the name of more money. More money more money more money. The things these people did, even though I little comprehend them (and what little I do get I gleaned from that one episode of "This American Life" about money [which is INCREDIBLE and you should go listen to it now], Fresh Air [particularly yesterday's, which was good, and which referenced an older episode with the same economist. I may seek the older one out.], and a little teensy bit of news reading), seem reprehensible to me, and it seems that it was all about making more money for a few people. I can't understand their motives otherwise. Can anyone clarify that for me? Were these unregulated financial products (the names of which escape me now, but I know it has to do with mortgages and...that stuff) created for any other reason but to rake in vast amounts of money?
So yeah, I'm all for regulation. Regulate the shit out of the greedy shits. I'm all for it. If it means less money for me down the road, so be it. Frankly, the US Government should stop protecting corporations and do more protecting of its own citizens. Regulations protect citizens; free markets protect corporations.
The fundamental assumption of a free market is that people will make choices that are good for themselves in the long-run. If that assumption was true, then complete free markets would work. However, here in the real world, people will do what their allowed to do and want to make "the kill" and do what's good for them in the short term. Given that, I agree, regulate the crap out of those greedy bastards!
Posted by: Leigh | September 19, 2008 at 07:12 AM
I understand your frustration with greed. Contrary to the Gordon Gecko mantra greed is not good. But regulation is not a simple answer. The effects of greed and power play can be found in regulation as well. Unchecked regulation can be just as devastating to the consumer as free enterprise.
The Florida insurance market is one of many examples of regulation gone bad. Most insurers in Florida got their asses handed to them a couple of years ago with all the hurricane losses. Many decided that Florida insurance rates needed to be raised; but rates are regulated and the State regulators said no go. Well, insurers said okay, we have 49 other states in which to write insurance, many of which do not have exposure to hurricanes. Hasta la vista Florida. What did that do to the people of Florida? It left them with few choices of where to get their insurance. Many were unable to insure their homes and autos and prices for coverage went sky high. The insurers that stayed in Florida already had prohibitively high rates and were positioned to write high hazard business. Until this bit of misguided over-regulation, they sort of operated like vultures, writing lousy coverage for people unable to get coverage from the "standard" market. Well, the state basically threw everyone in the state into the "unable to get coverage" bucket. As a result, the greedy few companies that are left are raking it in at the expense of the consumer. Essentially, the state eliminated competition which has hurt their citizens and left them with crap.
Another problem that I have with any type of rules or regulations has to do with who the rules are aimed at. If they are aimed at the lowest common denominator, we are all treated like idiots or in this case greedy bastards. I resent that. I also believe in the old saying "you get what you ask for". Treat em like they're greedy and they will be greedy because that's what you think of them. We must route out greed but treat the vast majority of ungreedy with respect because they disdain greed. That's civilized.
I know....boring. The truth is that the regulators themselves (look at our state government)are poster children for the misuse of power and the spoils that go with unchecked greed.
Phew...that's some strong ass coffee!
Posted by: Dadmo | September 21, 2008 at 07:59 AM