Comments on: LET’S NOT CONFUSE FREE MARKETS WITH FREEDOM http://hybridvigor.org/2009/04/28/lets-not-confuse-free-markets-with-freedom/ Improving decisions and outcomes through collaboration and deliberation Sun, 14 Feb 2010 23:08:49 -0700 http://wordpress.org/?v=2.8.5 hourly 1 By: STIGLITZ ON THE FATE OF AMERICAN CAPITALISM « The Hybrid Vigor Institute | hybridvigor.net http://hybridvigor.org/2009/04/28/lets-not-confuse-free-markets-with-freedom/comment-page-1/#comment-12472 STIGLITZ ON THE FATE OF AMERICAN CAPITALISM « The Hybrid Vigor Institute | hybridvigor.net Thu, 06 Aug 2009 16:45:08 +0000 http://hybridvigor.org/?p=226#comment-12472 [...] an article in Vanity Fair that discusses many of the themes of this blog (for example, see: Let’s Not Confuse Free Markets With Freedom, America on the Couch, and 2008: The Year the Free Market Died.) A Nobel-laureate economist, [...] [...] an article in Vanity Fair that discusses many of the themes of this blog (for example, see: Let’s Not Confuse Free Markets With Freedom, America on the Couch, and 2008: The Year the Free Market Died.) A Nobel-laureate economist, [...]

]]> By: Drewby http://hybridvigor.org/2009/04/28/lets-not-confuse-free-markets-with-freedom/comment-page-1/#comment-12465 Drewby Sun, 28 Jun 2009 06:33:50 +0000 http://hybridvigor.org/?p=226#comment-12465 I disagree whole heartedly with your statement that greed is at the heart of free-market capitalism. Such a statement implies that the converse, socialism of one form or another, is devoid of such motivation. If that were the case, there would be no such thing as governmental corruption. I think most disciples of Austrian economics would take umbrage to your assertion of Alan Greenspan as the spokesperson for free-markets. By their very nature, true free-markets are a highly decentralized organism that is ever changing. The buggy whip manufacturers may be on top today, only to find themselves dethroned by the Henry Fords of tomorrow. Alan Greenspan lost all creditability of any kind of free-market analyst when he went to work for the Federal Reserve. The Federal Reserve is the height of centralize planning and the antithesis of all things relating to the free-decentralized-market, because if you don't have true freedom in the monetary system, a true free-market is a virtual impossibility. The current economic conditions that you blame on greed and the free-market have many of their roots in governmental policy and corporate crony-ism. After 9/11 the Federal Reserve placed interest rates at point lower than what the free-market would have demanded. Cheap money abounded and people (the herd) began looking for the next up and coming industry. Low interest rates made it attractive to buy a home or upgrade your existing home. Fannie Mae, Freddie Mac and FDIC remove a good portion of the moral hazard for bankers who make bad loans. The mortgage brokers and bankers knew they would be selling the notes of the loans they made to the Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac and they would therefore bear the brunt of the risk. The bankers and brokers knew that if things got too rough for the GSEs government would surely step in and bail them out. Even if things did trickle down to their local bank branch, the FDIC is always there. In a true free market there would have been no Fannie Mae, Freddie Mac or FDIC. If the bankers/brokers got a little too greedy, the only thing they would have to look forward to is real bankruptcy, fraud charges and jail time. I disagree whole heartedly with your statement that greed is at the heart of free-market capitalism. Such a statement implies that the converse, socialism of one form or another, is devoid of such motivation. If that were the case, there would be no such thing as governmental corruption.

I think most disciples of Austrian economics would take umbrage to your assertion of Alan Greenspan as the spokesperson for free-markets. By their very nature, true free-markets are a highly decentralized organism that is ever changing. The buggy whip manufacturers may be on top today, only to find themselves dethroned by the Henry Fords of tomorrow. Alan Greenspan lost all creditability of any kind of free-market analyst when he went to work for the Federal Reserve. The Federal Reserve is the height of centralize planning and the antithesis of all things relating to the free-decentralized-market, because if you don’t have true freedom in the monetary system, a true free-market is a virtual impossibility.

The current economic conditions that you blame on greed and the free-market have many of their roots in governmental policy and corporate crony-ism. After 9/11 the Federal Reserve placed interest rates at point lower than what the free-market would have demanded. Cheap money abounded and people (the herd) began looking for the next up and coming industry. Low interest rates made it attractive to buy a home or upgrade your existing home. Fannie Mae, Freddie Mac and FDIC remove a good portion of the moral hazard for bankers who make bad loans. The mortgage brokers and bankers knew they would be selling the notes of the loans they made to the Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac and they would therefore bear the brunt of the risk. The bankers and brokers knew that if things got too rough for the GSEs government would surely step in and bail them out. Even if things did trickle down to their local bank branch, the FDIC is always there.

In a true free market there would have been no Fannie Mae, Freddie Mac or FDIC. If the bankers/brokers got a little too greedy, the only thing they would have to look forward to is real bankruptcy, fraud charges and jail time.

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