October 24, 2008

Greenspan loses faith in free market?

I know people who see the free market as a natural law, like gravity. They are so convinced that its mechanisms work, that they say the only thing that can undermine them is government regulation. Greenspan admits that he believed that the self-interest of those involved in an industry would manage better control than a regulatory agency. But maybe not now:
"But on Thursday, almost three years after stepping down as chairman of the Federal Reserve, a humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending.

“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told the House Committee on Oversight and Government Reform."

This doesn't seem like rocket science to me. I too celebrate the power of the market. But I have also compared it to the power of a wild tiger--powerful and innovative, but also potentially destructive. Perhaps this is a harbinger of a fundamental change in philosophy to a place where Grover Norquist and Newt Gingrich find themselves on the fringes of conservatism. We can only hope.

Oh, and just remembered that Scott McClellan endorsed Obama yesterday. Hard core Republicans will ignore him and Powell, but what about those in the middle?

1 comment:

Wayne said...

Obama and the Democrats should regulate the hell out of everything. Government can do a much better job of running things than any so-called "free market". And only the government can insure that everything is fair. That is, if Democrats are in charge.