Swimming With The Sharks

Will Wilkinson asks Why Don’t We Get the “Right” Regulations?

When the new regulatory settlement unravels, we’ll hear precisely the same things: that we didn’t have the right regulations in place because some opportunistic interests captured some part of the regulatory process. But if we know that’s going to happen in advance, shouldn’t we accept the limits on the possibility of effective long-term regulation and look for feasible alternatives to such thoroughly politicized financial markets?

Don Boudreaux makes the same point more poetically:

Among the articles of faith of "progressivism" is the theory - which never yields to experience - that you can fill the sea with enormous quantities of fresh red meat and then, Moses-like, successfully command the sharks not to devour it.

As long as Uncle Sam continues to stock the Potomac by ripping from the body politic such enormous quantities of flesh and muscle - now more than three trillion dollars worth annually - sharks and vultures will inevitably swarm throughout Washington in a competitive struggle to gorge themselves on this unfortunate feast.

This is the message that market liberals need to keep hammering home: democratic fundamentalism cannot possibly work the way its advocates want it to work. It sows the seeds of its own destruction; its internal contradictions inexorably lead to either state socialism or truly free markets. There is no middle ground. As always, Mises was prescient:

The middle-of-the-road policy is not an economic system that can last. It is a method for the realization of socialism by installments. [...]

Many people object. They stress the fact that most of the laws which aim at planning or at expropriation by means of progressive taxation have left some loopholes which offer to private enterprise a margin within which it can go on. That such loopholes still exist and that thanks to them this country is still a free country is certainly true. But this "loopholes capitalism" is not a lasting system. It is a respite. Powerful forces are at work to close these loopholes. From day to day the field in which private enterprise is free to operate is narrowed down. [...]

The impact of this state of affairs is that practically very little is done to preserve the system of private enterprise. There are only middle-of-the-roaders who think they have been successful when they have delayed for some time an especially ruinous measure. They are always in retreat. They put up today with measures which only ten or twenty years ago they would have considered as undiscussable. They will in a few years acquiesce in other measures which they today consider as simply out of the question. What can prevent the coming of totalitarian socialism is only a thorough change in ideologies. What we need is neither anti-socialism nor anti-communism but an open positive endorsement of that system to which we owe all the wealth that distinguishes our age from the comparatively straitened conditions of ages gone by.

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