Posted by Jonathan Adler:
Politicizing the Economy:
http://volokh.com/archives/archive_2009_09_13-2009_09_19.shtml#1252851304
Tyler Cowen has an [1]important column in today's NYT. It begins:
FOR years now, many businesses and individuals in the United States
have been relying on the power of government, rather than
competition in the marketplace, to increase their wealth. This is
politicization of the economy. It made the financial crisis much
worse, and the trend is accelerating.
Well before the financial crisis erupted, policy makers treated
homeowners as a protected political class and gave mortgage-backed
securities privileged regulatory treatment. Furthermore, they
allowed and encouraged high leverage and the expectation of
bailouts for creditors, which had been practiced numerous times,
including the precedent of Long-Term Capital Management in 1998.
Without these mistakes, the economy would not have been so invested
in leverage and real estate and the financial crisis would have
been much milder.
But we are now injecting politics ever more deeply into the
American economy, whether it be in finance or in sectors like
health care. Not only have we failed to learn from our mistakes,
but also we�re repeating them on an ever-larger scale.
Read the whole thing.
References
1. http://www.nytimes.com/2009/09/13/business/economy/13econ.html
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