Regulated Free Market is a Contradiction in Terms

Consider these two opening paragraphs from a New York Times op-ed:

Congratulations on your confirmation as Treasury Secretary, a position which [your predecessor/you] elevated to the level of ruler of the United States financial markets. No doubt these are troubling times, but they are also an opportunity to reshape the regulatory playing field in a way that has not happened since the Great Depression. When Alan Greenspan himself stated that he “made a mistake” in assuming that government oversight was unnecessary and that the free markets could be trusted, it put the nail in the deregulatory coffin. [Emphasis added.]

But make no mistake, while you may rule the financial markets, Congress is now bent on erecting its own regulatory regime. Political interests will vie for their own personal agendas. Your job will be to guide the new administration through this minefield and erect regulation that is not only sensible but as flexible and enduring as that which was created more than 75 years ago. [Emphasis added.]

Do you see the contradiction there? The writer mentions Greenspan’s repudiation of the free market, but then talks about remaking regulations that are as “flexible and enduring” as the regulations that have existed for over 75 years.

Let’s put this simply: “regulated free market” is a contradiction in terms. If a market is regulated, it’s not free. And so, the current financial crisis cannot be the fault of the free market, because that hasn’t existed for nearly a century. At the same time, all the evidence one needs of the failure of the regulated market is right there in this article.

Take your pick, people.

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