Regulated de-regulation...whatever!

Just finished watching the 'Big Fight' on NDTV, where the discussion centred on whether Capitalism would survive. I am shocked at the prescription put forward by the few corporate honchos and leftist economists on the discussion forum. They seem to advocate 'regulated deregulation'!

Did I hear right? It seems the 'regulated' environment is what saved India the blushes. Sure, lending policy, for example, in India may be far more 'conservative' as compared to what happens in the US., but nothing can be far from the the truth, as far as 'Regulation' goes.

Note what George Mason economist Walter Williams says, 'The financial collapse of Fannie Mae and Freddie Mac is not a failure of the free market because lending institutions in a free market would not have taken on the high-risk loans. They were forced to by the heavy hand of government. The solution is not a taxpayer-financed bailout. The solution is to let them fail and allow the people who invested in them, as well as the people who purchased homes they couldn't afford, suffer the losses. Of course that takes a level of political courage that is in short supply. There are other measures that should be taken as part of a second-best solution.'

As to whether Capitalism is dead, I would recommend the Leftists hold their horses. After all, anything they recommend is a sure recipe for Economic ruin.

Note what Gary Becker, Nobel economics laureate, Professor of economics at the University of Chicago, says in a WSJ editorial; 'Is this a final "Crisis of Global Capitalism" -- to borrow the title of a book by George Soros written shortly after the Asian financial crisis of 1997-98? The crisis that kills capitalism has been said to happen during every major recession and financial crisis ever since Karl Marx prophesized the collapse of capitalism in the middle of the 19th century. Although I admit to having greatly underestimated the severity of the current crisis, I am confident that sizable world economic growth will resume before very long under a mainly capitalist world economy.

Consider, for example, that in the decade after various predictions of the collapse of global capitalism following the Asian crisis, both world GDP and world trade experienced unprecedented growth thanks to the power of market competition on a global scale. The South Korean economy, for example, was pummeled during that crisis, but has had significant economic growth since. World economic growth will recover once we are over the present severe financial difficulties.

Courtesy: CD Blog


Unknown said…

I refer to the para in which you quoted Walter Williams. I thought our own UTI US64 mess was a case in point that showed the determination of the erstwhile government to take politically difficult decisions. Would you agree?
Ray Titus said…

To the extent, government's creation of the SUUTI, distancing from running a mutual fund by transferring ownership to SBI, LIC, BOB and PNB; diluting its holdings; the government did what's right;

Letting the markets decide is what's right.

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