Saturday, July 19, 2008

High Finance and Bolshevik Principles

by J. R. Nyquist

Weekly Column Published: 07.18.2008

I t was Joshua Rosner, writing in the Financial Times on Tuesday, who said it best. “In a capitalist economy, losers are expected to take losses and winners to gain.” But that’s not the way it works today, is it? More than three Decades ago, Richard Nixon famously said: “We’re all Keynesians now.” In 2008 we can go further. If George Bush had Nixon’s grasp of affairs, he would be forced to admit: “We’ve all become socialists, despite our lip service to the free market.”

Rosner says we have begun to nationalize bad assets. From there it is a small step to the nationalization of good assets. In fact, the two things logically entail one another. As Rosner asserts, we have officially lost faith in the market. We have lost faith in the source of our prosperity. We no longer abide the creative destruction of the market process. We do not want the suffering that naturally attends real growth. Good things and only good things are demanded. Losses are unacceptable, even though these always attend genuine achievement. Everybody has to be a winner.

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