Are We All Being Led Down The Garden Path?

The faith in the sanctity of the market is the bedrock of the Libertarian creed. It is not so much a philosophy as a religion, only in place of a benevolent God, we have the omniscient market. The market is seen as a perfect, self regulating mechanism. The implication is that, it is far better to let the market take its natural course, than intervene and cause much greater disharmony in the long run. Supporting their hypothesis with innumerable examples of bungled attempts by governments to meddle in the economy, their basic ethos is: the less government the better.

This argument is a bit like someone arguing that we should fire the gardener of a beautiful English style garden in which nature appears to be a cacophony, which naturally makes room for all and finds its own harmony. If one were to follow this advice and fire the gardener, for a time there would be very little visible effect. Nature would carry on, the seasons would bring changes, and life would appear to be going on very much as it had been before.

However, if you were to return to the garden after an absence of several years, the difference would be noticeable. It would look wild and dishevelled. Eventually, there would be no trace of what was once a beautifully balanced garden. This is because, while subtle and barely noticeable on the surface, beneath the surface, nature is relentlessly taking its course. The longer the garden is left, the more difficult it becomes to restore its equilibrium. If left too long, it simply runs to seed and one will pretty well have to start from scratch in creating a new order in the wilderness.

This is precisely what took place with the deregulation of the financial system. Bit by bit, it began to shift. Practices became steadily more and more aggressive and dodgy. The bubble it created drove up the house prices, which helped to keep it all hidden from view. Eventually, gravity kicked in and the artificially stimulated, housing bubble burst. Without deregulation, the bubbles can form from time to time, but of a much smaller duration and magnitude. The sheer size of this bubble was enough to destabilize, not only the local economy, but sent the entire world financial system into a tailspin.

No doubt, the diehard libertarians will attempt to blame the scoundrels who took advantage of the system. What they chose to overlook is that opportunity makes the thief. There are always hucksters looking for a chance to make a quick return and to bend the system to their advantage. Deregulation created a veritable Mecca for the con man. No one feels sorry for the thief who is caught. But, what of those sages who made his job so easy? Are they not just as culpable, if not more?

Overmanaging the economy is, no doubt, a mistake, but simply abdicating control to the whims of the market, is nothing short of madness. It is a course that is only ever recommended by those who either are direct beneficiaries of these practices, or feel themselves so well insulated from financial calamity that they are immune to any and all eventualities.