It’s been interesting to watch the whole Fannie Mae and Freddie Mac business in America become perhaps an example of losing trust in ‘the market’ and the belief that ‘the market’ will always be able to self manage.
As a republican government who would traditionally espouse small government exercising few regulatory controls and a free market left alone as much as possible to do what it wants to do moves to effectively nationalize the failing mortgage lenders at the cost of hundreds of billions of dollars of tax payers money then you have to wonder about how we may in future place stricter controls on how the free market operates. Do we need the market to be slightly less free?
It’s not just the markets as such, though that make me grind my teeth; market forces may be fine when they apply only to the markets. It’s the conviction that commercial principles are always the most efficient; that anything done for private profit and in competition must always be better and more effective than anything done for any other fudsy old reason such as the common good.
Once we wanted right-wing economics and left-wing social policy. Now it’s the other way round
I was also interested to read a piece via The First Post on Sunday by Phillip Blond some time ago under the attention grabbing title reproduced here.Well, attention grabbing to me anyway.
Blond argues that the neo liberal social policy in Britain can be seen by many to have failed on many levels we find that the right wing economic beliefs are equally not standing up to scrutiny as the credit crunch and global recession begin to bite, food and energy prices increase month on month and the divisions between rich and poor become even wider as social mobility returns to post WWII levels.
In Britain which more than the rest of Europe has embraced right wing economic policy the breaking up and selling off of the previously nationalised industries has not resulted in dramatically better and affordable services for the consumer. It can be reasonably argued that without government controls the free market would further maximise profits to shareholders, reducing further any investment in infrastructure which it still often expects central government to fund (didn’t government spin these things off in order to unburden the cost to the public purse & hopefully bring private investment on a scale government could not afford?.
Regulating The Market
So how do we get the free market to deliver what we the consumer wants without government having to continually bail out its excesses & legislate against its more unethical and selfish aspects.
Phillip Blond further argues that neither the left or the right has been able to do anything very effective about the poor (or for that matter, the needy) and so the idea of the government employing them directly becomes an idea that has never been quite been tried before.
A New Era?
Personally I’d prefer that the regulation needed to keep a free market in check were made by independent bodies of regulators rather than solely by government that is prone to force through opportunistic legislation with an eye to beefing up their by election or general election prospects rather than soberly regulating independently of that.
So are we entering a new global period in which a greater government intervention in the operation of the free market will now be necessary. A new era of balancing right wing economic policy with left wing social policy?
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