In the 18th century Adam Smith, the father of modern economics, wrote that the free market produced the right amount and variety of goods guided by “the invisible hand” and in the process benefited all mankind. Furthermore, pursuing one's self- interest promoted the general welfare and allowed the”the invisible hand” to work. Thus, “greed is good”. Also the market has the natural ability to establish a price that promotes a fair return. Pursuing one's own interest is, therefore, good. But even Adam Smith recognized that owners of business often met to control or raise prices.
Thus, government regulation is necessary because we cannot rely on business owners not to stymie “the invisible hand” in order to increase profits. Making more money can be an addiction because more is never enough. So stealth becomes endemic.
Smith was very much opposed to price fixing monopolies and subsidies to business. He believed in liberty and justice as opposed to fraud and injustice with impunity.
The prelude to our present economic crisis was the Wall St. bubble that destroyed Enron, WorldCom and Tyco. All the CEO's of these firms are now languishing in jail. Many more were never indicted for their thievery. As of today, the cheating continues. No one else has been indicted.
For the past 25 years our government has adopted rules that favor the rich and powerful and taken away the protections for workers and retirees. The new rules were directed at the regulators. Every game requires rules but Wall St. wants to play the game without rules. They want to do whatever they damn well please at the expense of the middle class and the poor. They even steal from their own shareholders and investors.
Let's look now at some of the individuals who influenced our economic decisions in the last 25 years and prior. The following people lived in a world of illusion: Ayn Rand: the ultra conservative Libertarian, Alan Greenspan: her disciple, Milton Friedman: the No Regulation Chicago School of Economics and Ronald Reagan, the no nothing politician, all wedded to the trickle down theory of economics. Their belief in the invisible hand was a fantasy and the trickle down theory or supply side economics was a myth. Obviously it did not work. No regulation works only in your dreams. In fact, in real life it is a delusion. It is unbelievable.
Even Adam Smith, and this is usually ignored in his work, recognized the need for rules. Despite "the invisible hand", he witnessed in own time business people applying for unneeded subsidies merely to increase their personal wealth.
A good example of a corporate executive illegally increasing his personal wealth was the stunt that Steve Jobs, the CEO of Apple Computer, pulled. Without the Board of Directors permission he was awarded stock options in the millions and then exchanged those options for stock in the hundreds of millions. It was fraud and the only person charged was the CFO in the amount of a $3.5 million fine. No action was taken against Jobs. Multiply this by the thousands of executives doing the same thing and we get an idea of the extent to which shareholders were robbed. It is pure and simple banditry for which no one is prosecuted. And any federal prosecutor who tried to get these guys was fired. So here you have the Justice Department aiding the cause of greed.
Alan Greenspan , the Chairman of the Federal Reserve since Ronald Reagan's administration, believed in no rules. He actually was convinced that Wall St. was run by honorable people who would protect the market from fraud. In short, regulation was unnecessary since the market could police itself.
Fast forward to a Congressional investigation where Alan Greenspan testified as to how mistaken and false was his economic theory. A theory that he believed for 40 years. He had to admit that he was wrong to believe in the self regulating power of the market.
Brooksley Born, the Chairman of the Commodity Futures Trading Commission (CFTC), the brilliant woman who saw the crises coming, warned Greenspan, Timothy Geithner and Lawrence Summers. She was told to shut up. Multiple times.
Until we reinstate regulatory controls on the banks and Wall St., financial crises will repeat, repeat and repeat. And the system will finally breakdown into total chaos.
But remember Wall St. and Goldman Sachs are doing God's work. Brothers and sisters, you will be saved by the “invisible hand” of Ronald Reagan.
References:
Front Line Documentary
Johnston, David Cay. Free Lunch
Wikipedia
Thus, government regulation is necessary because we cannot rely on business owners not to stymie “the invisible hand” in order to increase profits. Making more money can be an addiction because more is never enough. So stealth becomes endemic.
Smith was very much opposed to price fixing monopolies and subsidies to business. He believed in liberty and justice as opposed to fraud and injustice with impunity.
The prelude to our present economic crisis was the Wall St. bubble that destroyed Enron, WorldCom and Tyco. All the CEO's of these firms are now languishing in jail. Many more were never indicted for their thievery. As of today, the cheating continues. No one else has been indicted.
For the past 25 years our government has adopted rules that favor the rich and powerful and taken away the protections for workers and retirees. The new rules were directed at the regulators. Every game requires rules but Wall St. wants to play the game without rules. They want to do whatever they damn well please at the expense of the middle class and the poor. They even steal from their own shareholders and investors.
Let's look now at some of the individuals who influenced our economic decisions in the last 25 years and prior. The following people lived in a world of illusion: Ayn Rand: the ultra conservative Libertarian, Alan Greenspan: her disciple, Milton Friedman: the No Regulation Chicago School of Economics and Ronald Reagan, the no nothing politician, all wedded to the trickle down theory of economics. Their belief in the invisible hand was a fantasy and the trickle down theory or supply side economics was a myth. Obviously it did not work. No regulation works only in your dreams. In fact, in real life it is a delusion. It is unbelievable.
Even Adam Smith, and this is usually ignored in his work, recognized the need for rules. Despite "the invisible hand", he witnessed in own time business people applying for unneeded subsidies merely to increase their personal wealth.
A good example of a corporate executive illegally increasing his personal wealth was the stunt that Steve Jobs, the CEO of Apple Computer, pulled. Without the Board of Directors permission he was awarded stock options in the millions and then exchanged those options for stock in the hundreds of millions. It was fraud and the only person charged was the CFO in the amount of a $3.5 million fine. No action was taken against Jobs. Multiply this by the thousands of executives doing the same thing and we get an idea of the extent to which shareholders were robbed. It is pure and simple banditry for which no one is prosecuted. And any federal prosecutor who tried to get these guys was fired. So here you have the Justice Department aiding the cause of greed.
Alan Greenspan , the Chairman of the Federal Reserve since Ronald Reagan's administration, believed in no rules. He actually was convinced that Wall St. was run by honorable people who would protect the market from fraud. In short, regulation was unnecessary since the market could police itself.
Fast forward to a Congressional investigation where Alan Greenspan testified as to how mistaken and false was his economic theory. A theory that he believed for 40 years. He had to admit that he was wrong to believe in the self regulating power of the market.
Brooksley Born, the Chairman of the Commodity Futures Trading Commission (CFTC), the brilliant woman who saw the crises coming, warned Greenspan, Timothy Geithner and Lawrence Summers. She was told to shut up. Multiple times.
Until we reinstate regulatory controls on the banks and Wall St., financial crises will repeat, repeat and repeat. And the system will finally breakdown into total chaos.
But remember Wall St. and Goldman Sachs are doing God's work. Brothers and sisters, you will be saved by the “invisible hand” of Ronald Reagan.
References:
Front Line Documentary
Johnston, David Cay. Free Lunch
Wikipedia
