as a result, would not have prevented the current crisis, or might have
done so at the cost of significant inefficiencies in the economy:
I'm no economist, but do they seem to miss that:
1. The nationalization of financial firms such as that which the US
government has just performed on AIG and Fannie and Freddie was
necessary in the absence of regulation which kept them from engaging in
clearly unsustainable practices.
2. The nationalization of industry is bound to introduce great
inefficiencies into the operation of economies.
Market fundamentalists seem to think that the question is, "is it better
to regulate or let the market function." But we're not letting the
market function. Nor could we, unless we like the idea of a 1929-like
global economic meltdown. So, shouldn't the question be, "is it more
efficient to regulate or to nationalize?"
Brooks argues that regulators are not all-knowing, and so can't predict
the future. Maybe so, but there are times when they _can_ see the
future. I don't know about the current troubles in the financial
markets, but I believe that there were people calling for the regulation
of subprime mortgages well before the crisis began.
Of course, I couldn't see those problems myself--I'm not an economist.
But if I understand, a number of economists and lawmakers saw the risks
as early as 2002, and called for regulation of mortgages to prevent
predatory lending practices. Indeed, Georgia enacted legislation to
prevent those practices, followed by New York, New Jersey, and New Mexico.
Or am I missing something here? Probably am, since Dani Rodrik's most
recent blog posting reads something like, "which of the following
fourteen things explains our current wacky crisis?"
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