Had I Gone Crazy or Had They Gone Sane?

From Marketplace, James Galbraith:

Time to take control of markets, James Galbraith: Years ago, I realized that the free-market, supply-side crowd, true conservatives who’d ridden high with Reagan, dislike Bush as much as I do. I speak of the hard money, low-tax, Wall Street Journal, deregulate-and-privatize team, the nemeses of my youth, people like Bruce Bartlett, Paul Craig Roberts, the late Jude Wanniski. Suddenly, we were on the same side. Had I gone crazy or had they gone sane?

Whether it was right or wrong, “Reaganomics” had a logic. Each policy would aim at one problem. Tight money would cure inflation. Low taxes would stimulate saving and work effort. Small government would “crowd in” investment. Free trade would make us efficient. Smart people believed this and they had the authority of respected economists like Milton Friedman and Friedrich von Hayek to back them up.

But now those ideas are dead, buried, abandoned. Deregulation brought us miseries in finance, transport, energy and the climate. Free trade agreements dole out favors to big farmers and big pharma. The financial crisis finished off what was left of monetarism, the idea that the Fed should only worry about inflation. And everyone has given up on waiting for low taxes to unleash the creativity of the ultra rich.

Under Bush, oil and gas, drug companies and defense contractors, insurers and usurers control the government of the United States and it does what they want. This is the predator state. The wisdom of free markets? The President gave his own verdict in Houston the other day: “Wall Street got drunk.” True enough, but where were the grownups when the party went wild?

For many years, liberals have lived in fear and thrall of the market mantra. It’s time to get over it, for if true conservatives realize that our problem is a predator state, shouldn’t liberals be out there doing something about it?

Suddenly planning, standards, regulation and progressive taxes don’t seem so bad.

Originally published at Economist’s View and reproduced her with the author’s permission.

One Response to "Had I Gone Crazy or Had They Gone Sane?"

  1. Guest   August 22, 2008 at 5:04 am

    Dear Mark — Good article. I’m not smart enough to comment knowledgeably on everything you say, but it seems free markets don’t stay free very long with large competitors like Microsoft and other large corporations in them. Perhaps it would be helpful to be thinking more about dispersion of power instead of allowing power to concentrate. How to start the dispersion of power from where we are today in the world is difficult to see, but I think the answer to many of the problems you point at lies in that direction.