…There is a much better solution to the current financial crisis. But it requires discarding what has been conventional “wisdom” for too long: that government intervention in the economy (“big government”) must be avoided like the plague, because the “free market” will guide the economy towards growth and justice.
Let’s face a historical truth: we have never had a “free market”, we have always had government intervention in the economy, and indeed that intervention has been welcomed by the captains of finance and industry. They had no quarrel with “big government” when it served their needs.
It started way back, when the founding fathers met in Philadelphia in 1787 to draft the constitution. The first big bail-out was the decision of the new government to redeem for full value the almost worthless bonds held by speculators. And this role of big government, supporting the interests of the business classes, continued all through the nation’s history.
The rationale for taking $700bn from the taxpayers to subsidise huge financial institutions is that somehow that wealth will trickle down to the people who need it. This has never worked…