Sunday, October 26, 2008

Newsweek article blasts libertarians for "causing" financial crisis

Jacob Weisberg has an article on p 45 of the Oct. 27, 2008 Newsweek, “Blame the Libertarians” in his “Big Idea” column. He refers to the Ayn Rand-like “heroic view of capitalism” that can self-destruct without some government supervision or regulation. The online version is called "The Libertarians' Lament."

He writes to libertarian non-management of financial markets “We have narrowly avoided a global depression and are mercifully pointed toward merely the worst recession in a long while.” There is a grim, vertical picture of Wall Street called “sliver of hope.”

He refers to Alan Greenspan as a self-defined libertarian, who has recently admitted he was wrong to assume that private markets could always self-regulate. He talks about libertarian obsession with logical deduction, and calls libertarians “intellectually immature.” He echoes George Soros’s criticism of “market fundamentalism.”

The magazine link for the article is here.

Well, it’s not libertarian for government to pressure banks to issue mortgages to unqualified buyers. It’s not libertarian to encourage financial institutions to invest in instruments that cannot be evaluated actuarially and use ordinary investor’s money behind their backs. It’s not even libertarian to sever any connection between borrower and lender.

Weisberg also accuses of libertarians of ranting about "personal responsibility", almost to the point of wanting to see a "free market cultural revolution" where former executives work in soup lines.

Picture: Crowd at Marine Corps Marathon; note the financial institutions as sponsors

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