Free Market Failure
Actually the premise that the free market failed is incorrect. There was a large amount of government intervention into the free market that led to the housing boom.
In the lead-up to the boom there was a lot of pressure placed on making home loans affordable. This led to many of the standards by which banks lend being set aside because banks did not want to be accused of "redlining." As a result, not only were people with lower credit scores obtaining home loans, but speculators that would under normal conditions, only qualify for their primary residence, were getting approved for multiple houses. While many controls are needed in the marketplace to prevent fraud, insider trading etc., the government in this case created the conditions for the housing bubble and then blamed the "free market" for the inevitable bust.
Neither capitalism nor fire should be allowed to burn out of control.
Both have basic requirements for their continued existence, and both can be destructive if not carefully managed. Government has the job of managing shared resources, thus it should manage the economy. Rather than wrongly arguing that the government should not be running the economy, we should be making sure that they do it correctly.
Comment by Lowell of TX
The main reason for the crash is abuse of privilege.
It was the abuse of managers that created unions, the abuse of the aristocracy that created communism, and
it was the abuse of
Abuse sooner or later backfires.
The administration did the exact wrong thing by bailing out
That is why we have a system of checks and balances. We should stick to it.
Comment by Bruce of CO
Government bailouts are not necessary for "policing" a failed free market system.
They create dysfunction and imbalances in the way businesses view and assume risk.
Comment by Jim of CA
I believe corporatism has failed combined with the Fiat dollar and the Fed's inflationary policies over the last several decades. All of which have given us an insolvent bloated mess built on a mountain of debt. That is what has failed.
Government has intervened so much in the markets that to say it is free is ludicrous.
Comment by Ben of NM
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Free Market Failure | Reader Comments
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