Libertarian Myth
“That’s libertarians for you – anarchists who want police protection from their slaves” – Kim Stanley Robinson
The faith in the sanctity of the market is the bedrock of the Libertarian creed. It is not so much a philosophy as a religion- only in place of a benevolent God, we have the omniscient market. The market is seen as a perfect, self-regulating mechanism. The implication is that, it is far better to let the market take its natural course, than intervene and cause much greater disharmony in the long run. Supporting their hypothesis with innumerable examples of bungled attempts by governments to meddle in the economy, their basic ethos is: the less government the better.
This theory has much in common with the case of a gardener seeking to keep a vast plot of land in check. He is the regulator in this metaphor, and can do a certain amount in terms of pruning and planting, but even he is powerless to intervene in a very hot summer of a very cold winter. Nature must take its course on his garden. To blame the gardener for any damage done and fire him for his efforts is what the libertarians would have us do, but it will have little effect on the garden at the end of the day.
Once several years had gone by the garden would be overgrown and out of control, to the point where its original beauty was entirely lost. This is the result of nature, acting beneath the surface of the land to overrun the edicts laid down by the now absent gardener. The longer the garden is left unmanaged, the more unmanageable it becomes. Finally it will simply deteriorate into wild land gone to seed, and any new gardener will need to start from scratch in restoring its original beauty.
This is precisely what took place with the deregulation of the financial system. Bit by bit, it began to shift. Practices became steadily more and more aggressive and dodgy. The bubble it created drove up the house prices, which helped to keep it all hidden from view. Eventually, gravity kicked in and the artificially stimulated, housing bubble burst. Without deregulation, the bubbles can form from time to time, but of a much smaller duration and magnitude. The sheer size of this bubble was enough to destabilize, not only the local economy, but sent the entire world financial system into a tailspin.
No doubt, the diehard libertarians will attempt to blame the scoundrels who took advantage of the system. What they chose to overlook is that opportunity makes the thief. There are always hucksters looking for a chance to make a quick return and to bend the system to their advantage. De-regulation created a veritable Mecca for the con man. No one feels sorry for the thief who is caught. But, what of those sages who made his job so easy? Are they not just as culpable, if not more?
There is a balance to be struck, of course, between micromanaging the economy and leaving it entirely free from regulation. But what we have seen in recent years surely represents the most extreme form of freeing up market forces to act without regulation of any kind. It is worth remembering that those who advocated these policies did so knowing that they would either benefit personally from the highs or be immune from the lows because of the state of their own financial successes.
