Blog on the Run: Reloaded

Tuesday, July 19, 2011 8:19 pm

Another quote of the day

Filed under: Quote Of The Day — Lex @ 8:19 pm
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Commenter Gerald Fnord, at Edroso’s place:

The problem with a system that will let you buy anything is that everything will be for sale … at which point no right is inalienable.

Put another way, the market is not a solution for everything, and even libertarians — sane ones — grant that.

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Monday, April 19, 2010 8:30 pm

Markets: About as rational as Charles Manson

Filed under: I want my money back. — Lex @ 8:30 pm
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Nobel laureate Joseph Stiglitz:

The notion economists pushed – that markets are efficient and self-adjusting – gave comfort to regulators like Alan Greenspan, who didn’t believe in regulation in the first place. They provided support for the movement which stripped away the regulations that had provided the basis of financial stability in the decades after the Great Depression; and they gave justification to those, like Larry Summers and Robert Rubin, Treasury secretaries under Clinton, who opposed doing anything about derivatives, even after the dangers had been exposed in the Long-Term Capital Management crisis of 1998.

We should be clear about this: economic theory never provided much support for these free-market views. Theories of imperfect and asymmetric information in markets had undermined every one of the ‘efficient market’ doctrines, even before they became fashionable in the Reagan-Thatcher era. Bruce Greenwald and I had explained that Adam Smith’s hand was not in fact invisible: it wasn’t there. Sanford Grossman and I had explained that if markets were as efficient in transmitting information as the free marketeers claimed, no one would have any incentive to gather and process it. Free marketeers, and the special interests that benefited from their doctrines, paid little attention to these inconvenient truths.

So if markets aren’t going to be rational, then we need to be. That means rationally setting rules, boundaries and level playing fields. And, yes, in some instances that means government will need to step in.

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