Free Markets December 4, 2008January 3, 2017 But first . . . NEVER BE AFRAID TO GOOGLE It turns out, almost anything you want to know really can be found with Google. I too often forget that. On matters of traditional research (did Scooter Libby really represent Marc Rich? what’s a dram? how large was the National Debt when Reagan took office?) it’s by now completely instinctual – whatever I want to know, I find almost instantly with Google. My mother told me of a story she had read somewhere about an old high school acquaintance of mine who for than a decade, it turned out, had had two separate wives living cross town from each other, a scheme that only finally unraveled on Parents Day* when he accidentally enrolled both sets of children in the same private school. How juicy is that? So she started going through a towering stack of old newspapers trying to find it for me – but in under a minute I had pulled it up for myself on my iPhone. *OK, it may not literally have been on Parents Day; but that’s how I would write the script for the movie. Both sets of kids were in the same school. But on matters of what I guess I’d call conceptual research (how to do stuff), I too often forget to try. I assume the only route to an answer is Microsoft customer support; and, therefore, needless to say, prefer to suffer in ignorance. Case in point: For the last couple of years I’ve been using Outlook for my Calendar and Contacts and was always annoyed I could have only one open at a time. Surely there must be some way to have them both open and just toggle between them as needed. But, as that would only save me 4 seconds each time I switched back and forth from the way I had been doing it . . . and because finding out how to save these 4 seconds would take an hour if it were possible at all . . . I never got around to it. Until today, when I entered, “can i open my outlook calendar in one window outlook contacts in a separate window?” in the Google search box and a second later got Microsoft Outlook: 9 Things You Didn’t Know You Could Do (the very first of which was the one I was looking for). And now . . . FORD (AND FREE MARKETS) James Ooi: “Ford could suspend its payment of the preferred dividend [discussed yesterday] for up to 20 quarters. This could even be a condition of their bailout package or at least a gracious tip of the hat to the taxpayer. I wholeheartedly agree that the market gets a lot of things wrong, but I’m not sure this is one of those times. It’s usually good if you can find a reason Mr. Market ought to be wrong, like “AIG owns a lot of Ford preferred and has to sell it by year end” (not true, just an example). And just to go back to the political, since I know that is your true passion: if it is so hard to beat Mr. Market (even if there are a few miscalculations here and there), why do progressives think that a Henry Waxman-type or even the most brilliant leading lights like Larry Summers and Paul Krugman could guide our economy better than the market? Progressives are using this crisis to ridicule market fundamentalism and the idea that the market is always right, and yet no one has any evidence that a handful of really smart people deciding things in a room can be more right than markets.” ☞ It will be interesting to see how things play out with Ford. Your take is definitely the other side of the story. When Chris paid his 36-cent “fee” to play this game, he was betting there was a good chance the preferred would pay even just one more 81-cent dividend, and possibly more.<br ?–> As to progressives, most of us do believe strongly in the importance of markets – sensibly regulated, impartially refereed, appropriately nurtured markets. And I’m guessing you do, too. Would you do away with FDR’s Federal Deposit Insurance, giving banks the freedom to fail massively in irrational bank runs again? Would you do away with the S.E.C.? How about insurance regulation requiring insurers to maintain adequate reserves to pay claims? Was it folly to impose the Glass-Steagall Act that, from 1933 to 1999, forbade commercial banks from engaging in risky investment-banking practices? Or did the folly actually lie in repealing it in 1999? Would you have let the free market take down AIG and Citibank, freezing up the entire world financial system, letters of credit, international trade, and pretty much the entire modern world economy? Would you eliminate the Fed, so no central bank were there to provide confidence that inflation will not get too far out of hand? (Reducing inflation fears increases the confidence to invest for the long term.) And, similarly, to provide confidence that credit will be eased as needed to keep recessions from becoming too deep? (Normally, at least, two of the things that do keep recessions from becoming too deep are (a) Fed credit easing and (b) investors’ assumption that it will work.) Should the government not provide the anti-trust regulation that keeps competitive markets competitive? Zoning? Product safety regulation? Environmental standards? Were we wise, in 1973, after the first OPEC oil shock, to keep the government from “intervening” with a thoughtful reorientation of our federal tax system? Namely, by lowering the income tax on work and investment (both of which we want to encourage) and replacing that lost revenue by raising the federal tax on gasoline consumption (which we want to discourage) by, say, a dime a gallon per year – forever – thereby to encourage fuel efficiency? The failure of government to meddle in this way has had monumental, tragic consequences for our country. (And, by the way, we should still do it.) Had we taken this step in 1973 or 1974, our auto industry today would lead the world in fuel efficient technology; we would, as a nation, collectively be untold trillions of dollars wealthier (for not having had to send those untold trillions overseas to buy oil); we’d enjoy greater national security; Ford’s preferred dividend would be as solid as a rock. So, yes, “free market fundamentalism” is an extreme that is worthy of ridicule, if anyone truly espouses it. In truth, not many do. Instead, it’s a question of finding the right balance between under-regulation and over-regulation. Too much meddling and not enough. It’s also a question of execution. Some ideas make great sense when executed well and no sense at all – the very same idea! – when executed poorly. So it’s healthy to have free-market advocates always challenging the wisdom of government involvement, to keep it from going too deep (and/or being executed poorly); and to have free-market skeptics always on guard against the very real, and potentially brutal or even catastrophic, consequences of inadequate government involvement. What progressives are saying, I think, is that by and large – especially in the last eight years (and not insignificantly in the last 14, when the anti-government-involvement party won control of both houses of Congress) – we have lost our balance and lurched too far toward the latter.