This Is Our City

PS, having the SEC investigate Enron or Madoff for fraud is perfectly consistent with libertarian thinking. Both thrived because the SEC refused to do its job. That gave investors the wrong idea that there was nothing wrong with either. Enron and Madoff were failures of the state to do its God given role of protecting life, liberty and property. They were not market failures.

Carlos, we have never had unregulated markets, so how can you claim they do more harm than good? We have had nothing but increasing regulation since FDR. The Federal Register of new regulations has grown by over 50,000 pages every year since 1970. The problems we face today are the perfect storm of massive, conflicting regulations. Madoff and Enron thrived because the government gave them their stamp of approval. As Smith wrote, government licensing and regulation only provide cover for fraud. Of course, all libertarians in all times have insisted on the rule of law to protect life, liberty and property.

Hermit, markets do not “inadequately reflect the future value of the goods …” Greer only advertises his ignorance of price theory. He attempts to set economics back 150 years by advocating cost of production price theory. Economic science advanced only after economists discovered the principles of subjective pricing and marginal pricing. Greer denies both. And Greer promotes Marx’s nonsense that markets naturally lead to monopolies. Markets destroy monopolies; governments create them.

To politely disagree with McKinney, our modern interpretation of Smith as an "unrestrained Free Market" Libertarian is a far stretch from reality. Smith advocated free trade with respect to British Mercantilism, which was an economic reality that limited entrepreneurship. The difference is that free trade for Smith doesn't mean "no regulation" trade. For Smith the driving force behind capitalism was the individual desire to exercise an ambition that in the process of satisfying personal interests, also met the needs of society. Our current experience, however, is that unregulated markets result in more harm than good. So, a good market system is one that allows and provides the opportunities for individuals to be creative, while protecting the interests of the rest of society. Madoff, Enron, and corporate greed must be controlled and only the government can do that with a minimum harm to society, national security, and financial stability. Capitalism also has its limits.

The choice between self regulation and government regulation is a false dichotomy. Adam Smith proposed a third option: market regulation. Smith was professor of ethics. His economics is his ethics applied to the market. He invented nothing. Everything he learned about market regulation of ethics came from studying the Dutch Republic. He discovered that competition in the market does a far better job of regulating greed than anything the government can do. Of course, he recognized the need of the state to prosecute crimes against life, liberty and property. We don’t have to rely solely on self-regulation. The Dutch Republic proved Smith’s point for 200 years.