Friday, November 5, 2010

“Let the Free Market Reign”

11/5/2010—After the election, NPR interviewed the President of a tea party group from Texas, Fort Worth I think. The quote above is from her.

Now, if her reaction is at all representative, and the tea party movement is certainly representative of a substantial current in America, then we really will have more of the same policies in the future that we have had in the past. And the Republicans will enjoy continuing electoral success.

I admit that I find it odd that she draws this conclusion from the events of the last two years. The last time America experienced an economic downturn as severe as this “Great Recession”, in 1932-33, the reaction was much different. The Great Depression convinced the American people that the market was not infallible and natural. At that time, America turned to the regulatory state. Since this time economic decline occurred after an era of deregulation, I would have expected the same reaction of turning to regulation. After all, private market players invented mortgage backed derivatives and falsely described their value. It was the market that brought this catastrophe on with one of the market's usual speculation binges.

Undoubtedly some Americans did draw an anti-market conclusion. Joe Sestak ran for Senate in part on his support for Wall Street regulation and that seemed to be one of his strengths in Tuesday’s voting.

Whatever lesson people drew from the Recession was not the result of manipulation. A lot of money poured into the election cycle. But no one paid for advertising in 2009 to convince the America people that the market was still reliable.

Maybe the reason some Americans think the market was not to blame for the downturn is that we now have a regulatory state and it failed to protect us. Then, an activist state did intervene to stop the bleeding, but did so by propping up the same institutions that brought on the problems to begin with. At least the market tends to punish irresponsible behavior.

The American free market ethos must be pretty deeply embedded in our character to still have such resonance.

1 comment:

  1. Can you crosspost this or expand on it for HuffPo? I can't agree with you more.

    Hopefully a meaningful dialogue will begin wtih these folks elected to the house... where the point that can be made emphatically is that free market left unchecked almost destroyed the US and world economies.

    I have yet to meet a true in life tea party person. Here in VT we've elected a governor who's all single payer all the time. I'd be out of a job if they could truly find a way to make it work (contain costs) but I think that's a long ways away.