Quote:
In high school or university we are taught:
Markets are a system and systems have structure. The structure of a well-functioning market is defined by the theory of perfect competition. Well-functioning markets of the real world are never perfect, but basic structural characteristics can include many small buyers and sellers; buyers and sellers having equal access to information; and comparable products.
It's all ********.
What we have nowadays is a market of late degenerate capitalism. Morality is negotiable. Players want to take advantage of economic freedom but don't want to pay the price of their strategic errors. They use political resources to influence peddle and so gain advantages from the governmental process that aren't achievable in the "free market".
We have bureaucrats who transcend political parties and politicians, and a political culture of abuse and misuse of government power for private ends - cheap or free money, speculative assets, tax relief, tax incentives, loan guarantees, market intervention.
"Regulatory arbitrage" (aka dodging the spirit of the law) is the name of the game. Banks bet against investments they actually bundled and sold to their own clients. When it goes belly up, the taxpayer takes the hit and the bankster buys a Bentley.
In a situation where we've already suffered the financialisation of our entire existences, this economic philosophy puts our individual and social existences at risk.
Rational economic policy aimed at true growth has been replaced by greed and the short-sighted quest for "shareholder value". There is a mad obsession with high stock prices. "Eat the cake and have it too."
Which is pretty well how human self interest works. It's not a matter of how can we make a market economy work better, it's how can I make it work better for me.
20th May 2012, 06:58 AM
