Reason’s Matt Welch – with help from the New York Times‘s Andrew Ross Sorkin (and some additional links) – explains why Glass-Steagall’s repeal cannot reasonably be said to have caused or deepened the 2008 financial meltdown. Matt explains also how opportunistic politicians (pardon the pleonasm) nevertheless fuel and employ this myth for their own purposes.
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Here’s a letter to the New York Times:
Explaining how (non-cronyfied) financial institutions raise living standards by promoting economic efficiency, David Brooks writes “Private equity firms are not lovable, but they forced a renaissance that revived American capitalism” (“How Change Happens,” May 22).
A better description is that Bain Capital and other private equity firms facilitated and expedited (rather than “forced”) a revival of American capitalism. What ultimately forces the growth-promoting efficiencies that private equity firms facilitate and expedite are consumers. They do so by refusing to purchase goods and services from inefficient suppliers. Were consumers indifferent to the prices they pay and to the product quality they receive, inefficient producers would be just as profitable as efficient ones. Private-equity investors could not then profit by buying and revitalizing inefficient firms.
So if politicians and pundits really wish to excoriate those responsible for shutting down hopelessly inefficient producers and for forcing others to operate more efficiently, they should blame consumers. These pols and pundits should demonize the likes of families and small businesses that greedily seek to get as much as possible in return for each dollar they spend.
Sincerely,
Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA 22030
Tired of the obsessive concern with the “distribution” of income or wealth? Scott Winship is an unfailing source of wisdom and solid facts about that matter – see most recently here, here, and here.
In addition, a great new book (which I read in manuscript) is in the works: Max Borders’s Superwealth. In his unique, and uniquely persuasive, voice Max challenges those people who insist that income differences in modern America are a worthy matter for concern.
… is from Brian Doherty’s new book, Ron Paul’s Revolution, as quoted here by Bryan Caplan:
He’s [that is, Ron Paul is] the only politician willing to judge America’s foreign policy adventures by the same standard we apply to other countries’ foreign policy adventures.
For this fact, and the political courage that it reveals, Ron Paul deserves enormous applause.
Here’s a letter to the Washington Post:
It’s a shame that your top-headline report today on the continuing stream of lobbyists into the White House is news (“White House visitor logs provide window into lobbying industry,” May 21). No one should be surprised that, as you report, “The visitor logs for Jan. 17 – one of the most recent days available – show that the lobbying industry Obama has vowed to constrain is a regular presence at 1600 Pennsylvania Ave.”
Mr. Obama’s pledge to exclude lobbyists from the White House was, from the start, about as believable as a madam’s pledge to exclude men willing to pay for sex from the whore house.
Sincerely,
Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA 22030
