“We need a balence between govt and the markets, but time has shown that unfettered free wheeling private enterprise leads to price fixing and rampant financial manipulation.” ~ Fred Lapides

Fred, where have you seen “free-wheeling private enterprise” in your lifetime?

Was that what you’d call the economic shenanigans that led to the recent economic crisis? “Free-wheeling private enterprise?”

Did lenders just decide, on their own, to start lending to people who couldn’t ordinarily qualify for loans under sensible free-market standards? Those normal lending standards had been established by years of market experience, and on an unhampered market where a lender won’t get special help from government if he lends foolishly, do you think there would be many lenders who would have risked their businesses and livelihoods in careless lending practices?

In a truly free-market economy,governments do not bail out businesses. Businesses follow prudent practices, and take risks based on sensible criteria, and sink or swim according to their own decisions.

In the recent lead-up to the crisis, too many sub-prime loans were made because government regulatory agencies, urged on by politicians, demanded that lenders obey quotas to see to it that a certain percentage of loans go to people who could not ordinarily qualify under sensible criteria. The Justice Department threatened prosecution against lenders who did not comply with these quotas.

This coecive threat, plus the belief that the government would financially cushion any damage that followed, played a huge role in the economic disaster that resulted.

Furthermore, the problem that the quotas were meant to fix was caused by previous government interventions.

For an elaboration of these and other non-free-market causes of the economic mess we’re in, please read “The Housing Boom and Bust” by Thomas Sowell. It’s only 148 pages, so it won’t take up much of your time, but it will give you another perspective to consider.

Still, there are a few comments in the essay that don’t pass the smell test.

(1) “‘General Motors . . . will not participate voluntarily in what stands out crystal clear at the end of the road—a regimented economy’”, said Sloan.

How ironic. Now, was GM a corporation the owners of which enjoyed regimented sponsorship of the state, as by limited liability? Well, yes. Probably its financiers, suppliers, etc., too. Such limitation helps to allay fears among investors that they’ll get burned by one of their fellow investors, and you’ll not soon get the approximate of ltd. liability by contract. Another form of sponorship is roadbuilding, esp. the vastly expanded roadbuilding of the past 100 years. Without government to subsidize automakers this way, the full cost of car ownership would not be masked, and the purchase decision of car would have to factor this in.

In fact, GM participated in a regimented economy througout the jouney, Sloan was involved personally for decades, and GM stayed in business (which suggests positive cash flow over a long period of time). In Sloan’s defense, maybe he was suffering from the principle of salesmanship. Too bad he didn’t live to see what became of his Governmennt Motors.

(2) “With freer markets…”?

Aren’t all markets either free or not free? Whatever happened to the principle of negation and the law of noncontradiction??

Think of commerce as you would a person, who is either a slave or not a slave, either not free or free. If the person is unfree and then the unfreedom is diminished, s/he remains unfree nonetheless. S/he’s not freer, just less unfree, like an Oberkapo in a concentration camp upon promotion from mere Kapo.

The idea, again, is that there are degrees of enslavement but not of freedom. If you suppose otherwise, you must either accept (a) degress of freedom BUT NOT of slavery, which would be ludicrous (think: Oberkapo), or (b) use ‘free’ and ‘unfree’ as contraries, not contradictories. But (b) vastly complicates the issue, for what terms contradict both ‘free’ and ‘unfree’ and yet are not synonymous with either, as most use ‘unenslaved’ and ‘enslaved’ now? Perhaps two terms themselves contraries with respect to each other.

Anyhow, the conclusion becomes, “with less rigged, less unfree markets,…”. Of course, this will make some whine and complain about negativity. Let them pound sand.

Do you know where I could find information on the wages of U.S. soldiers during the Second World War?

I had believed as Jonathan did, but your point is very well taken. I knew (from family stories and what I’ve read) that everyone had saved his money during the War — there was nothing to spend it on after all — but had not taken the time to think through the ramifications of its being saved in the form of government bonds.

I suppose that the large manufacturers made enough profit through their war production to fund the initial return to civilian goods, but it certainly does point to the return to a less-regulated economy as the primary source of the post-war boom.