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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

bogeymen and fairy tales « Previous | |Next »
January 17, 2008

We often hear about the European bogeyman from the free marketeers and The Australian newspaper. Bogeyman stands for Big Government that crushes freedom in the name of equality welfare state style. Big Government strangles the economy and creates a culture of dependency is their message. So the welfare state needs to be rolled back and replaced by individual initiative and self-help. Things are best left to the markets is the battle cry. We need to create an opportunity society.

Paul Krugman in The New York Times says:

According to the anti-government ideology that dominates much U.S. political discussion, low taxes and a weak social safety net are essential to prosperity. Try to make the lives of Americans even slightly more secure, we’re told, and the economy will shrivel up — the same way it supposedly has in Europe. But the next time a politician tries to scare you with the European bogeyman, bear this in mind: Europe’s economy is actually doing O.K. these days, despite a level of taxing and spending beyond the wildest ambitions of American progressives.

My favourite free market scenario is the privatization of highways. This is a classic libertarian fantasy: government auctions off the land, private enterprise pays for construction and maintenance, tolls cover the cost, competing routes keep it all efficient. So what about the intersections? What happens there? Another company owns them. And the traffic lights? Same? So how are the customers on the different roads treated fairly or equitable? Why through incentives to the companies of course.

So what happens when market failures are substantial enough to overcome any fear of countervailing government inefficiency--eg., global warming or cancer caused by Big Tobacco?

There is a difference between between using market forces and leaving something to the market. Governments can intervene to use market forces to our advantage rather than hoping the market corrects itself.

| Posted by Gary Sauer-Thompson at 6:43 AM | | Comments (2)


a good quote from this article on climate change in New Matilda:

"There is an urgent need to recognise that the market's fixation on short-term profit maximisation is not an appropriate instrument to induce the large-scale and costly infrastructural changes that need to take place in all countries in the transition to low-carbon economies."

My thoughts exactly. Markets should adapt to and enhance societies. Instead, the ideologically driven free-marketeers of Washington see it the other way around. Nowhere is market failure more evident (arguably) than in health care. The US spends the most on health care (as a percentage of GDP), yet has one of the most inequitable health systems in the developed world.
Check out the work of economist Vicente Navarro who has provided some data that would make neo-liberal market totalitarians weep.