Richard Abrams, at UC Berkeley, is blogging on Berkeley's new faculty blog Of ideology, recession, and policy paralysis, Mar. 4, 2010. What he says is much of the same as what I have been saying about the misguided continuing faith in "free market" theory as developed by the Chicago School.
It is rather amazing that a failed theory--one that has explicitly predicted the opposite of actual occurrences and one that has no ability to explain why its deregulatory emphasis has led to failed markets rather than successful ones--should continue to garner any support whatsoever in the public sphere. I suppose it has to be chalked up to the mighty power of the status quo and the dollar. Companies, and their owners, benefit enormously from being able to consolidate and dominate large sectors of the economy. While the economy doesn't function for most of us ordinary workers, it yields considerable reward for those at the top. And an ingrained answer "competition is important, so we need free markets" gets repeated even when the very markets under discussion are ones that have always thrived only with a considerable amount of government intervention. Health care does not thrive best in a cutthroat competitive environment among health giants--look at Medicare and the Veterans Administration for evidence of the success of government run programs.
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