One Less Globalization Fan Boy
I’ve always thought E.J. Dionne Jr. was one of the better columnists, recently my opinion of him has further improved. Here’s most recent column on capitalism’s present challenges.
Since the Reagan years, free-market cliches have passed for sophisticated economic analysis. But in the current crisis, these ideas are falling, one by one, as even conservatives recognize that capitalism is ailing.
You know the talking points: Regulation is the problem and deregulation is the solution. The distribution of income and wealth doesn’t matter. Providing incentives for the investors of capital to “grow the pie” is the only policy that counts. Free trade produces well-distributed economic growth, and any dissent from this orthodoxy is “protectionism.”
In a way this one of the least covered stories. While there is ton of micro coverage about the economy’s failing, the truth the economy is failing on a long term macro level. The stock market taking a dive over the course of a year is a big story, but doesn’t really change the nature of the system. However, the stock market not being a good investment over a 7 year time horizon is a fundamental in our economy.
Similarly the unstoppable towards economic Globalization is terminally halted. The IMF is basically insolvent, and the WTO hasn’t been able to agree on anything for the entire decade. Americans want less Globalization and Brazilians want more, it’s quite the Alice in Wonderland scenario.
Some of this was immediately foreseeable; I don’t know anyone thought Europe and US were going to stop subsidizing their farmers, or that the developing world would just say “OK it’s not big deal”. Other parts were surprising. For instance America changed it’s regulatory structure just 6 or so years ago, to ensure crap like the mortgage crisis taking everyone by surprise didn’t happen. It’s Enron all over again.
It’s getting pretty obvious we’re in system failure mode on the global economy, but I’m sure not the type of global capitalism fan boys in the major papers are going to be deal with it.
Filed under: Politics | 1 Comment
Tags: E.J. Dionne, Economy, Global Economy, Globalization, US Economy
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As a libertarian I am always hesitant of liberal weenies like you, Colunnino. The problem with our free market is that it has never been free. It is free for the good times, then the government steps in to avoid a needed economic correction when things look really really bad (like now). If the government actually let Bear Stearns fail, entities in the future would price risk higher, be more cautious, and be less likely to fail. As these entities were more cautious, they would extend less credit in the good times, and therefore would not have as far to fall if they did collapse, thus not posing the risk of a system wide failure that would necessitate government action.