L.A. Times: Americans may be losing faith in free markets

[DeepModem Mom]

NEWS ANALYSIS
Americans may be losing faith in free markets
Things are hard all over the financial landscape, and politicians and experts are now looking with favor at more, not less, government involvement in the economy.
By Peter G. Gosselin, Los Angeles Times Staff Writer
July 16, 2008

WASHINGTON -- For a generation, most people accepted the idea that the core of what makes America tick was an economy governed by free markets. And whatever combination of goods, services and jobs the market cooked up was presumed to be fine for the nation and for its citizens -- certainly better than government meddling. No longer.

Spurred by the continued housing crisis, turmoil in financial markets, spiking oil prices, disappearing jobs and shrinking retirement savings, the nation and its political leaders have begun to sour on the notion that the current market system is the key to a fair, stable and efficient society.

"We're at a hinge point," said William A. Galston, a senior fellow at the Brookings Institution in Washington who helped craft President Clinton's market-friendly agenda during the 1990s. "The strong presumption in favor of markets, which has dominated public policy since the late 1970s, has been thrown very much into question." Now, to a degree not seen in years, politicians and outside experts are looking with favor at more, not less, government involvement in the economy....

***

The fact that experts keep pushing back the date when conditions may improve and the failure thus far of any national leader -- including either of the major-party presidential candidates -- to offer a convincing vision of how America will make its way back to sustained prosperity suggest that the current crisis will probably be very different from other recent economic bad patches. So may Americans' reaction to it....

"If the pendulum swung away from government toward much greater confidence in markets during the last generation, the pendulum is clearly swinging back again now," said Daniel Yergin, whose 1998 book with coauthor Joseph Stanislaw, "The Commanding Heights," chronicled the worldwide spread of the free-market credo. "Everything is weighing in at the same time, and that affects how people view markets and government," Yergin said.

"Nobody in this country really believes in unfettered free markets, and nobody really believes in socialism," said UC Davis historian Eric Rauchway, but economic crises of the past have produced constituencies favoring the reining in of markets and regulation of the economy -- constituencies that ultimately grew large enough to produce change....

http://www.latimes.com/news/nationworld/nation/la-na-losingfaith16-2008jul16,0,5725955,full.story

[LeftCoast]

1. It's not a 'free' market if we keep baling out financial institutions

They want the free money, but they don't want the regulation. Well, guess what, I want the gov't to give me free money with no strings attached too. Unfortunately, as I'm not a republican, that seems unlikely to happen.

[GreenPartyVoter]

4. Exactly. Free market means the failures should be allowed to die. Is that happening? No, not

for certain privileged corporations.

[spanone]

16. right. it's only a free market to the republicans when they are making a profit

another thread says it best....privatize the profits and socialize the losses

[glitch]

17. Turns out their definition of free differs from the traditional.

They just meant free to them.

[irislake]

2. Tee hee, no kidding?

Took yu long enough!

[GreenPartyVoter]

3. Actually, Mr. Rauchway, I really believe in socialism.

[MadHound]

5. Well, first of all it would be refreshing to actually have free markets to believe in

But the simple fact of the matter is that we don't. The markets, in areas ranging from finance to housing to energy aren't free, in fact some of them are heavily manipulated. Adam Smith's invisible hand hasn't been at work in a lot of US markets for a good quarter century or more.

Instead, what we have is rampant market manipulation where bubbles are formed and burst, where the markets are manipulated for the good of the few and wealthy and the detriment of the rest of us. If the markets were truly free, we would have seen Bear and Stearnes, along with Fanny Mae and Freddy Mac go down by now, with GM and WaMu in free fall.

What we have is simply the illusion of the free market, an illusion designed to fool the suckers and keep making money for the few. Meanwhile, the latest twist is that though profits are privatized, the risk is socialized. This isn't the free market, this is manipulation, plain and simple.

[Leopolds Ghost]

14. Nothing in the US is free. Every sector of life is now manipulated. We have zones for every activity

Name one aspect of life that does not have permissible zones attached to it.

We are living in a totalitarian republic, not unlike Sparta.

[crimsonblue]

15. this...

is Sparta?

[MsTryska]

6. *sigh*

makes we wish i was still arguing with libertarians. Would love to know the mental jujitsu they are applying in order to keep the faith in these trying times.

[depakid]

7. Maybe fools who parrot this nonsense in the corporate media believed it

but I doubt those who lived through the savings and loan crisis thought free market fundamentalism was ever a good idea.

Yet craven Dems joined with Republicans to keep pushing this irrational agenda REGARDLESS of what the public thought. With predictable results.

[DinahMoeHum]

8. The only places where free markets exist are

in theory and in political speech.

:evilfrown:

[navarth]

9. DUH!!

Gee what happened....did they lose their cable signal?

[applegrove]

10. Thank gosh. Some reality back after 30 years of GOP bullshit. I wonder

how long it will take Wall Street types to get with the program or if they will go to their graves sprouting the words "deregulation".

[The Backlash Cometh]

11. If I could predict this was going to happen, then it was foreseeable to

everyone. I argued with a Libertarian nearly seven years ago, insisting that regulation was a natural response and reaction to a free market model, because no one was going to stand by and watch millions of people lose everything they own while the markets correct themselves. Not to mention that people at the top will forever be trying to game the system to their advantage, so free markets would never be free, anyways.

[Joanne98]

12. DUH!

[petgoat]

13. The loss of faith might have happened in 2002 if not for 9/11

The Worldcom scandal, the ENRON meltdown, the Tyco scandal, the Merrill
Lynch scandal, and the Arthur Andersen collapse were all coming, and
were probably evident to the Eliot Spitzers of the world. There was also
the matter of the Pentagon's inability to account for $2.3 TTTTTrillion
in expenditures, a little matter that was announced by Rumsfeld the day
before 9/11.

Is it hopelessly naive of me to think that TIME and Newsweek might have
been running cover stories asking "Is Corporate Capitalism Inherently
Corrupt?" and "What About that Military Industrial Complex, Anyway?"?

After the twin towers collapsed with 2700 people inside them, the "collapse"
of ENRON seemed trivial. No crisis of confidence, no soul-searching.

An interesting sidebar is that the Securities and Exchange Commission
occupied floors 11 through 13 of World Trade Center Building 7. It just
happens that these floors are where most of the fires that burned in that
building took place. Hundreds of active case files were destroyed, and
investigations were disrupted. The prevailing official theory seems to be
that fires on these floors were so fierce that the floors collapsed,
leaving one column without lateral bracing for a distance of three stories
so that, fire-weakened, it failed. Building 7, a 47-story skyscraper, fell
in less than 7 seconds into a tidy heap, destroying NY offices of the SEC,
the DoD, the IRS, the Secret Service, and the CIA.

[Political Heretic]

18. Wow that didn't take much.

Wait until the real trouble hits...

[mmonk]

19. I prefer the terms "exploitation economics" vs. "control economics".