Orwell in charge at the Post

by Russ Roberts on March 30, 2009

in Complexity & Emergence

Arnold had a nice letter to the editor in Saturdays Washington Post, making his very wise point that each round of financial regulation is a reaction to the causes of the latest crisis and thereby helps spawn the next crisis.

Above his letter was this one

A formula is emerging from this economic crisis. If a corporation
succeeds, through market expansion or acquisition of complementary or
competing businesses, it becomes "too big to fail," thereby achieving
every free-market advocate's dream of paradise. The taxpayers, aka the
U.S. government, underwrite the risk, and the corporation banks the
profits.

Simple, right? Why did it take so long to figure this out?

SALLY CUTLER

Chevy Chase

It's an interesting definition of "free-market advocate." A free-market advocate evidently wants the government to be actively involved in bailing out big losers. Why would the Washington Post think this merits publishing. Evidently, some of the editors there also believe that free market advocates are in favor of government intervention. Bizarre.

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{ 15 comments }

dave smith March 30, 2009 at 10:32 am

I noticed that letter, too.

What a misunderstanding of what free market supporters think.

And the person to OK that letter either is a goof ball or someone who wants to give that misunderstnading merit. Or both.

Matt March 30, 2009 at 11:20 am

I think this letter does represent the views of some republican opportunists who advocate free-market ideology when it suits them (Fox news anyone?).

But yes, true free-marketers aren't so fickle.

Euler March 30, 2009 at 11:23 am

It's no wonder newspapers are failing when the editor is so neglectful that he allows shit letters devoid of any logic like that to be published.

Crusader March 30, 2009 at 11:27 am

Actually Mr. Roberts, it is not Orwell in charge but the people he warned us about! This is a common mistake.

I love Big Brother and he loves me.

MnM March 30, 2009 at 11:38 am

I agree, Russ, it's very strange. Rather than point out the blatant hypocrisy of saying one thing and doing another, many people, including editors, default to blaming free markets when those markets are anything but free.

A man's actions will put the lie to his words. This seems obvious to me. Why don't others get it?

Seth March 30, 2009 at 1:26 pm

Thanks for the classic straw man fallacy Sally. It's time for all of us to review our logical fallacies and be on the ready to dispel them as the come at us. We've let them fly for too long. This site has a good list of fallacies.
http://www.nizkor.org/features/fallacies/

Nothing throws somebody back in a debate quite as much as exposing one of their points as a blatant fallacy.

jl March 30, 2009 at 1:36 pm

It's sadly common, though, isn't it? Free market advocates are expected to defend corporate 'welfare', corporate tax breaks, everything any big business does, etc. Much of the citizenry sees the world by a different frame in which all arguments break-down along something like have/have not lines, and free markets are supposed to help the haves. In fact, of course, free markets don't lie anywhere along that dimension, but try explaining that to a talking head – even on Fox.

ben March 30, 2009 at 3:26 pm

This letter exemplifies a classic mistake of confusing free market ideals with producers' ideals. Producers actually do not like competition, nor free markets, and they often ask for regulation and government licensing because this creates rents they are best positioned as incumbents to capture.

Bob Smith March 30, 2009 at 3:37 pm

I think it's neither a bizarre nor a misunderstanding, it's a calumny. It has two purposes: the first is defamation, the second is implying that free market advocates want government intervention just like progressives do, such that there is and should be no obstacle to the progressive agenda.

Crusader March 30, 2009 at 3:44 pm

ben – which is exactly what happened in feudal Europe with lords and guilds. Hopefully we've moved beyond that. Maybe not.

Jacob Oost March 30, 2009 at 4:10 pm

Jaw-dropping ignorance of how an economy works–or what various schools of thought have to say–is commonplace among the public at large but much more so among the left. Go to DemocraticUnderground.com. For some reason I haven't figured out, they are CONVINCED that libertarians, conservatives, free marketeers, etc., are all in favor of financial company bailouts.

Crusader March 30, 2009 at 4:14 pm

Jacob – basic economics is about the allocation of scarcity. You can do that under any system – capitalism, communism, mixed. It just becomes a question of 2 things:

* how efficient is the system of allocation?
* how politically viable is the system?

Adam March 30, 2009 at 6:47 pm

It's "free-market" in the way that "curly" means bald.

Ujjwal March 30, 2009 at 7:19 pm

I thought the letter actually made sense. If i were running a company, my idea of paradise cannot and should not be a free-market – that's a pretty tough place to be in what with having to innovate and satisfy customers and all that kind of boring stuff. My idea of paradise would be a world of Paulsons and Geithners who would hand me sackfuls of taxpayer money when the going got tough, provided i was running the "right" non-Lehmanian company of course. So naturally, i'd advocate a Paulsonian free market economy :)

vidyohs March 30, 2009 at 7:45 pm

If a business is "to big to fail" doesn't it also follow logically that it no longer has to produce anything of value, or actually anything at all?

It becomes a conduit for taxpayer money going.
.
.
.
.
down the rabbit hole.

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