Posted by Ilya Somin:
Does the Financial Crisis Discredit Libertarianism? Round II:
http://volokh.com/archives/archive_2008_12_21-2008_12_27.shtml#1230062822
Arianna Huffington has [1]a widely circulated op ed claiming that the
current economic crisis discredits free markets. She provides very
little in the way of evidence. There isn't much here that wasn't aired
in Jacob Weisberg's [2]similar piece back in October. So I refer
interested readers to my rebuttal to Weisberg in [3]this post.
Huffington does, however, cite[4] the recent New York Times article
claiming that the crisis was caused in part by the Bush
Administration's supposed commitment to free markets. I'm not going to
analyze the article in detail here. However, I will note that it also
emphasizes that the Bush administration engaged in considerable
government intervention incentivizing financial institutions to issue
mortgages to poorly qualified homebuyers as part of its policy of
promoting homeownership. As the article puts it:
Mr. Bush had to, in his words, �use the mighty muscle of the
federal government� to meet his goal. He proposed affordable
housing tax incentives. He insisted that Fannie Mae and Freddie Mac
meet ambitious new goals for low-income lending.
"Us[ing] the mighty muscle of the federal government" doesn't exactly
sound like laissez-faire to me.
More generally, the notion that the Bush Administration had any
serious commitment to free markets is laughable in light of the fact
that it created the largest new government program in decades (the
2003 Medicare prescription drug bill), [5]presided over the greatest
expansion of government spending since the 1960s, and [6]massively
increased regulatory spending as well.
References
1.
http://www.realclearpolitics.com/articles/2008/12/laissezfaire_capitalism_should.html
2. http://www.slate.com/id/2202489/
3. http://volokh.com/posts/1224544434.shtml
4.
http://www.nytimes.com/2008/12/21/business/21admin.html?_r=1&scp=1&sq=bush%20markets%20homeownership&st=cse
5. http://volokh.com/posts/1146756572.shtml
6. http://www.reason.com/news/show/130328.html
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