Wednesday, May 26, 2010

Blind, Dumb, Invisible Hand

Why "markets" should not be allowed to rule the world. Or probably shouldn't even be allowed to choose the local dog-catcher.

From The Eurozone's Self-Inflicted Crisis by Mark Weisbrot.

To make it worse, “the markets” can’t seem to decide what they want from these governments in order to love them again. Two weeks ago the Euro was plummeting because the financial markets wanted more blood: they wanted Greece, Spain, Portugal, and the other currently victimized countries of Europe (Italy and Ireland) to commit to more spending cuts and tax increases. Then they got what they wanted, and within a day or two, the Euro started crashing again because “the markets” discovered that these pro-cyclical policies would actually make things worse in the countries that adopted them, and reduce growth in the whole Eurozone.


Who's bright idea was it to put "markets" in charge? Markets are probably useful things as a means of enabling trade. I kinda like that I can buy something with money instead of trying to acquire the two chickens and a health insurance policy that my auto mechanic might otherwise request.

But promoting "markets" from a useful tool to the supreme arbiter of all human affairs was obviously a really stupid idea.

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