As the economic crisis continues, we're constantly hearing critics blaming America's alleged "laissez-faire economy" for somehow causing it. Tthe New York Times recently declared: "The United States has a culture that celebrates laissez-faire capitalism as the economic ideal." It's hard to know precisely what such a statement might mean or why the assertion was made.
First, the assertion doesn't fit with the considerable government involvement, some of which reaches back to Hoover's time. There are 15 cabinet departments, nine of which control various aspects of the U.S. economy: the Departments of Transportation, Housing and Urban Development, Health and Human Services, Education, Energy, Labor, Agriculture, Commerce, and Interior. In addition there are many federal agencies controlling many more aspects of our economic lives: the IRS, the FRB and FDIC, the EPA, FDA, SEC, CFTC, NLRB, FTC, FCC, FERC, FEMA, FAA, CAA, INS, OHSA, CPSC, NHTSA, EEOC, BATF, DEA, NIH, and NASA.Second, as to the why, it may be that attempts to blame problems on free markets provides justification for more government involvement.
Since obviously we are far from a lassize faire economy and with the trend almost constantly toward more government involvement, blaming free markets for economic conditions provides justification for more government involvement. By defining a condition as a problem needing immediate action leads to unlimited government. Here's the response of unlimited government (compiled by Reason magazine) to our current economic condition:
* $29 billion for Bear Stearns
* $143.8 billion for AIG (thus far, it keeps growing)
* $100 billion for Fannie Mae
* $100 billion for Freddie Mac
* $700 billion for Wall Street, including Bank of America (Merrill Lynch), Citigroup, JP Morgan (WaMu), Wells Fargo (Wachovia), Morgan Stanley, Goldman Sachs, and a lot more
* $25 billion for The Big Three in Detroit
* $8 billion for IndyMac
* $150 billion stimulus package (from January)
* $50 billion for money market funds
* $138 billion for Lehman Bros. (post bankruptcy) through JP Morgan
* $620 billion for general currency swaps from the Fed
So far as of November 7, the total is over $2 trillion dollars: $2,063,800,000,000 about $6,800 for every man, woman, and child or about $15,000 per taxpayer given to private firms. The belief in the unlimited wisdom and beneficence of government is responsible for such immoral actions, not the Libertarian ideology of free markets which takes a clear stand for protecting individuals from such hyperactive government action.
