Admissions Of The Failures Of Extreme Free Market Policy
Alan Greenspan admitted yesterday that he may have been wrong in some respects in his extreme free market approach to the American economy during his time as chairman of the Federal Reserve.
From Mr. Greenspan’s testimony yesterday before Congress—
“I made a mistake in presuming that the self interest of organizations, specifically banks and others, was such that they were best capable of protecting their own shareholders and the equity in the firms,” Greenspan said. Having run the… central bank from 1987 to 2006 — under…three Republicans and a Democrat — Greenspan acknowledged that views he’s long held are now in question. “The problem here is that something that looked to be a very solid edifice and indeed a critical pillar to market competition and free markets did break down. And that, as I said, shocked me and I don’t fully understand why it happened,” he said. “And to the extent I figure out where it happened and why, I will change my views. And if the facts change, I will change.” Word of Greenspan’s confession spread quickly in Washington, where until recently he was treated as royalty….”After years of confrontation about the role of government regulation, I’m glad to see he now recognizes that his ideas are flawed,” Sen. Bernie Sanders, an independent from Vermont and frequent Greenspan sparring partner, said in a statement.”
Less noticed yesterday was that former President Bill Clinton criticized his own administration’s handling of issues related to the world food supply—
“Former President Clinton told a U.N. gathering Thursday that the global food crisis shows “we all blew it, including me,” by treating food crops “like color TVs” instead of as a vital commodity for the world’s poor. Addressing a high-level event marking Oct. 16’s World Food Day, Clinton also saluted President Bush — “one thing he got right” — for pushing to change U.S. food aid policy. He scolded the bipartisan coalition in Congress that killed the idea of making some aid donations in cash rather than in food. Clinton criticized decades of policymaking by the World Bank, the International Monetary Fund and others, encouraged by the U.S., that pressured Africans in particular into dropping government subsidies for fertilizer, improved seed and other farm inputs as a requirement to get aid. Africa’s food self-sufficiency declined and food imports rose.”
Free market policies, many of them quite extreme, regarding our most basic needs of money to live on and food to eat have failed. (Government oversight of these free market policies failed as well.)
Let’s hope that Senator Obama, if elected, and the newly strengthened Democratic Congress can make again the case for government’s—and by extension the average person’s— role in our economy and society. It’s clear that the old order has abdicated. For the moment at least. Now is the time for policies that favor people over greed in both the United States and the rest of the world.