Why the Austrian, Keynesian, Marxist, Monetarist, and Neo-Liberal economists are all wrong


I’m continually stuck at how financial blogs are 1) providing the most incisive analysis of the current crisis and 2) are getting seriously pissed at what’s happening. They genuinely thought our markets were free and open. Now that it’s become obvious to all that the game is rigged (and at the highest levels too), such bloggers, often libertarian, are providing invaluable commentary because they know precisely how the game is played. And they want change. Real change.

Jesse’s Café Américain on why the underlying problem is an entrenched elite that pretends to believe in free markets.

The most intractable part of the current financial crisis, and the ongoing problem of the US economy is the huge tax which is levied on the American public by its corporations, primarily in the financial and health care sectors, and a political system based on lobbyists and their campaign contributions.

There are hidden taxes and impediments to ‘free trade’ at every turn. The ugly truth is that capitalism-in-practice hates free markets, always seeking to overturn the rules and impose oligopoly if not outright monopoly through barriers to entry, manipulation of the political process, distortion of regulation, predatory pricing, brute force, and the usual slate of anti-trust practices.

Remember, this is coming from a capitalist, not a Marxist.

Discussion rarely proceeds very far because of the dialectical nature of American thought. Both extremes are wrong, but they seem to content to merely bash each other, pointing out their errors, while repeating the same mistakes over and again.

Precisely. Red and Blue screaming at each other solves precisely nothing. And allows the current corrupt system to continue.

Because our system has been abused for so long, and is so distorted and imbalanced and dominated by a relatively few organizations beholden to a self-serving status quo, reform is not an afterthought, it is the sine qua non.

It means that until the banks are restrained, and the financial system is reformed, and balance is restored, there can be no sustained recovery.

Can you see the angry populist mobs in the background of that quiet call for reform. I can. And that’s what’s coming if reform continues to be blocked. The teabaggers are just the leading edge of that. Their anger is genuine, if unfocused. There’s plenty of common ground between them and the left, but everyone needs to stop screaming first to realize that. Then we could start to move together towards real change. Without destructive, mindless mobs.


The notion that “if only government would not regulate markets at all everything would be fine” is a variation of Rousseau’s romantic notion of the noble savage which no one believes except those who wish to continue to act like savages, and those who get no closer to the real work of an economy than their textbooks. Economic Darwinism works primarily to the advantage of the sharks. Anyone who believes that ‘no regulations’ works well has never driven on a modern highway at peak periods.

  • DJ

    Adam Smith recognized that, left to its own devices, the system concentrates wealth at the top. When that happens, the system ceases to function properly. He recommended progressive taxation to recycle the accumulated wealth.

    But power, too, accumulates at the top over time. Unfortunately, I have seen no systemic tool to recycle that power back to the people– except (metaphorically) to “water the tree of Liberty.” Relating back to popular disgust, I have actually seen a bumper sticker that says, “It’s time to water the tree.”

    Personally, I prefer a Gandhian approach, though as a culture we’re not especially nonviolent.

    • Hmm, except Jefferson said the tree gets watered with the blood of tyrants and patriots alike. Yes, a Ghandian approach would seem to be better!

    • Wonder how they’d feel about me pissing on their tire? You know, first rule of over fifty, never pass up the opportunity… to water the tree. Tire. Whatever.

      Naw, that would be provocative.

      • DJ

        Not sure about your reference to “tire.” Where I worked, the tire was a symbol of oppression. All too often, it was filled with gasoline, placed around someone’s neck, and set alight for a rather gruesome execution. Pissing on it would presumably have little positive effect, and could result in a weenie roast at your expense.

  • I’ve read about those neckties. The sentiment is pretty much the same.

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