The solution is to decentralize power, to reformat government in a manner that lessens it's participation, but greatly strengthen the governments, um, governance capacity. To have a government that is incredibly strong and bound by equally strong, and highly specific, non-flexible limitations. A system of government that isn't centralized but systemically omnipresent throughout society in as dispersed a manner as logistically possible.
A free market cannot exist without those conditions. There is very little free in any of our economies, and any self-ordering elements that actually do exist in our economy are inescapably influenced by the centralizing influences of the government elsewhere. Everything effects everything.
If you believe that this crisis is the result of the 'free market', you're seriously out of sync with the workings of our society, the nature and cause of this crisis. You think you know, because you think someone who thinks they knew, knew, but you don't and you're wrong. Period. There is no point in me arguing my case--I can't possibly get anywhere--, because your error is far deeper the subject at hand and is out of my reach; it's source is in the realm of intellectual ability, and I don't know how to effectively teach people how to think smarter on this topic.
That sounds very nearly to me calling you stupid, but it's not. I just think you've spent too much time defending shallow generalizations and intellectual shortcuts to people you want to think the same way you think, rather than actually looking deeper and growing in understanding of the topic-- you cannot possibly approach this topic with a scientific mindset, and come out of it still thinking the free market is to blame. You're just skimming around on the surface of things, arguing at the same depth on this topic as the rest of popular culture.
The great mistake even strong free-market supporters is stressing degrees of economic freedom. While there is a gray area between free and unfree markets, there is also an incredibly complicated relationship between the fundamental elements of an economy. Duh, but let me stress an example.
For instance, there may be a partioular industry that is 'deregulated', or is in some manner having a government-imposed burden lifted. That, taken out of context, is a 'more free' market. But what are the dynamics that will result from that 'freer' segment of the market as a consequence of it's integration with other, just-as-regulated-as-before elements of the economy?
Is it not obvious that lowering the regulatory requirements a government-financed housing lender has to subsidize and stimulate their particular industry, by utilizing their implicit government-backed and thus lowering the element of risk for private banks of which they are sold-- while maintaining business-as-usual monetary policy, will that not lead to an enormous and fast moving misallocation of faux-capital to the housing sector? The segment was never free, a regulation was simply lowered-- the implicit risk-absorbing government was just as successful at distorting prices by being a middle man between both lender and lendee== information on risk and reward between homeowners and banks is significantly distorted, when you have the government of the United States whose very presence acts to tame risk by both buyers and lenders, sitting in the middle. Banks were 'granted' lower regulations, and had the implicit backing of the government. This must be stressed. They gave out loans more freely, at lower rates, because they had the governments sanctioning the activity. They figure, the government will bail us out in a worst case scenario, so those loans seemed safer and thus can be offered cheaply.
And quite predictably, those loans went sour, and the government did indeed bail them out. There is nothing "free" about anything that went on there. The visible hand was there in every step of the way-- distorting prices (information), distorting risk perception, inflating confidence, and otherwise putting that segment out of sync with actual, real factors-- factors that require questions like, can I reasonable expect this person to pay off their mortgage? become: what do I have to lose if the government is both subsidizing and guaranteeing the repayment or responsibility of this loan? Checks and balances get thrown out of the window. Systemic imbalances occur-- the entire industry didn't wake up and suddenly decide to be reckless with their loans. No, they made decisions just as naturally as humans always have. The problem was the information being conveyed to them via prices was distorted. It wasn't a problem of perception, or decision making. It was government static in the pricing system, in the risk/reward mechanism.
An actually free housing market, theoretically within an complete-as-possible free economy-- there are natural checks and balances. The relationship between the consumer and the bank is direct and the information directing the flow of capital between the two is as perfect as is possible within an imperfect human society. Meaning, mistakes in risk perception will happen, naturally, but they cannot by system-destroying, simply because they are not being granted special privileges by a centralized, system-overriding force that isn't restrained by the same checks and balances within the private sector. Everyone has their own interests at stake in a free market-- it is self-organizing, self-regulating, and doesn't require coerced centralized management. Free a segment of an otherwise top-down economy, and there is a huge risk of seismic shifts in capital allocation-- very possibly bubble creating shifts-- that inflate and demolish that sector, even if it was "freed". But it was destroyed not because that sector was 'freed', it was destroyed because it is intricately linked to the surrounding, unfree elements of the economy. The very deregulation of that sector, spurs it's destruction-- not because the 'free market', but because government participation permeates and distorts the entire system, especially the parts most recently deregulated. It stunts and distorts everything.
Recessions are a natural part of an economic system-- it's a self-adjusting, healthy economic 'cleansing' of improperly employed capital, it's a necessary element of growth. This recession-- this depression, I should say-- was and is not a natural occurence of a free market. It is system failure caused by the only institution that permeates the entire system. The government.
A free market cannot exist without those conditions. There is very little free in any of our economies, and any self-ordering elements that actually do exist in our economy are inescapably influenced by the centralizing influences of the government elsewhere. Everything effects everything.
If you believe that this crisis is the result of the 'free market', you're seriously out of sync with the workings of our society, the nature and cause of this crisis. You think you know, because you think someone who thinks they knew, knew, but you don't and you're wrong. Period. There is no point in me arguing my case--I can't possibly get anywhere--, because your error is far deeper the subject at hand and is out of my reach; it's source is in the realm of intellectual ability, and I don't know how to effectively teach people how to think smarter on this topic.
That sounds very nearly to me calling you stupid, but it's not. I just think you've spent too much time defending shallow generalizations and intellectual shortcuts to people you want to think the same way you think, rather than actually looking deeper and growing in understanding of the topic-- you cannot possibly approach this topic with a scientific mindset, and come out of it still thinking the free market is to blame. You're just skimming around on the surface of things, arguing at the same depth on this topic as the rest of popular culture.
The great mistake even strong free-market supporters is stressing degrees of economic freedom. While there is a gray area between free and unfree markets, there is also an incredibly complicated relationship between the fundamental elements of an economy. Duh, but let me stress an example.
For instance, there may be a partioular industry that is 'deregulated', or is in some manner having a government-imposed burden lifted. That, taken out of context, is a 'more free' market. But what are the dynamics that will result from that 'freer' segment of the market as a consequence of it's integration with other, just-as-regulated-as-before elements of the economy?
Is it not obvious that lowering the regulatory requirements a government-financed housing lender has to subsidize and stimulate their particular industry, by utilizing their implicit government-backed and thus lowering the element of risk for private banks of which they are sold-- while maintaining business-as-usual monetary policy, will that not lead to an enormous and fast moving misallocation of faux-capital to the housing sector? The segment was never free, a regulation was simply lowered-- the implicit risk-absorbing government was just as successful at distorting prices by being a middle man between both lender and lendee== information on risk and reward between homeowners and banks is significantly distorted, when you have the government of the United States whose very presence acts to tame risk by both buyers and lenders, sitting in the middle. Banks were 'granted' lower regulations, and had the implicit backing of the government. This must be stressed. They gave out loans more freely, at lower rates, because they had the governments sanctioning the activity. They figure, the government will bail us out in a worst case scenario, so those loans seemed safer and thus can be offered cheaply.
And quite predictably, those loans went sour, and the government did indeed bail them out. There is nothing "free" about anything that went on there. The visible hand was there in every step of the way-- distorting prices (information), distorting risk perception, inflating confidence, and otherwise putting that segment out of sync with actual, real factors-- factors that require questions like, can I reasonable expect this person to pay off their mortgage? become: what do I have to lose if the government is both subsidizing and guaranteeing the repayment or responsibility of this loan? Checks and balances get thrown out of the window. Systemic imbalances occur-- the entire industry didn't wake up and suddenly decide to be reckless with their loans. No, they made decisions just as naturally as humans always have. The problem was the information being conveyed to them via prices was distorted. It wasn't a problem of perception, or decision making. It was government static in the pricing system, in the risk/reward mechanism.
An actually free housing market, theoretically within an complete-as-possible free economy-- there are natural checks and balances. The relationship between the consumer and the bank is direct and the information directing the flow of capital between the two is as perfect as is possible within an imperfect human society. Meaning, mistakes in risk perception will happen, naturally, but they cannot by system-destroying, simply because they are not being granted special privileges by a centralized, system-overriding force that isn't restrained by the same checks and balances within the private sector. Everyone has their own interests at stake in a free market-- it is self-organizing, self-regulating, and doesn't require coerced centralized management. Free a segment of an otherwise top-down economy, and there is a huge risk of seismic shifts in capital allocation-- very possibly bubble creating shifts-- that inflate and demolish that sector, even if it was "freed". But it was destroyed not because that sector was 'freed', it was destroyed because it is intricately linked to the surrounding, unfree elements of the economy. The very deregulation of that sector, spurs it's destruction-- not because the 'free market', but because government participation permeates and distorts the entire system, especially the parts most recently deregulated. It stunts and distorts everything.
Recessions are a natural part of an economic system-- it's a self-adjusting, healthy economic 'cleansing' of improperly employed capital, it's a necessary element of growth. This recession-- this depression, I should say-- was and is not a natural occurence of a free market. It is system failure caused by the only institution that permeates the entire system. The government.
