_http://henryckliu.com/page169.html_ (http://henryckliu.com/page169.html) Too Big to Fail versus Moral Hazard
By Henry C.K. Liu The end of the Cold War and the global eclipse of socialist tenets have left US faith in market fundamentalism with the aura of a natural philosophy. The US calls her system capitalist democracy. In doing so, care is taken to distinguish democracy from equalitarianism. Conceptually, while the Declaration of Independence claims that “all men are created equal”, the nation that live by it readily accepts the premise that men do not create wealth equally. The US system rejects social democracy which aims to reduce glaring economic disparity between people. The US system claims it promotes equality of opportunities rather than equality of rewards. It believes that the logic of the market is the most equitable arbitrage. Free-marketeers decry intimate relationships between government, finance and business and oppose even corporatism as an adjunct to the welfare state. They believe that the market’s unforgiving rules of selecting and rewarding winners and penalizing losers are inherently fair, efficient and necessary for maximizing overall economic growth. It is obscene that when they are punished by market forces for their wayward manipulation that they call for government help for themselves in the name of the common good. The trouble with this view of free market capitalism is that it is a fallacy to assume that truly free markets can exist without regulation. Markets are always constrained by local customs and rules, unequal conditions and unequal information access by participants. In fact, markets come into existence through artificial construction by initial participants with rules that subsequent participants must observe as an admission price. These artificial rules generally favor the market founders and put later comers at a perpetual disadvantage. World Trade Organization (WTO) rules are the latest visible examples. Often the only option left to late comers is to start alternative markets hoping that they will enjoy the very privileges and advantages they oppose in existing markets. Thus all markets require a wide range of regulations to check and balance their inherent march toward inequality and unfairness. Trade, by definition, is based on mutually balanced weaknesses. Mutual strength leads only to conflict, and unequal strength leads to conquest of the weak. **************Looking for simple solutions to your real-life financial challenges? Check out WalletPop for the latest news and information, tips and calculators. (http://www.walletpop.com/?NCID=emlcntuswall00000001) _______________________________________________ Marxism-Thaxis mailing list Marxism-Thaxis@lists.econ.utah.edu To change your options or unsubscribe go to: http://lists.econ.utah.edu/mailman/listinfo/marxism-thaxis
