America’s more or less
free-market capitalism is not under threat from Marxist-Leninism: That system’s
demonstrated failures have consigned it to the ash-heap of history. Nor is it
under threat from China’s system of managed economy plus political repression:
We can’t even abide police breaking up a disease-infested
occupy-something-or-other encampment. It is not even under threat from
socialism, the hysterical charges of some anti-Obama extremists notwithstanding.
No, it faces a far more subtle
enemy—the gradual loss of acceptance of the idea that markets more efficiently
allocate resources than governments, of the parallel idea that properly but not
excessively regulated markets produce unparalleled levels of material wellbeing
(something Marx conceded), and, finally, of the conviction that material
prosperity is fairly shared among all who participate in its creation, with
enough left over to care for those too ill, old, or otherwise impaired to
participate in productive activity. When the broad consensus erodes that
capitalism as practiced in America is better at creating and distributing
wealth than any other system, the way is open for fundamental legislative and
regulatory changes that strip the system of its flexibility and innovative drive.
Which is what makes the
behavior of the leaders of our financial sector so inexplicable. Start with a
few widely agreed facts. The financial sector does not have a recent history of
which it can be proud. Investment banks bet their own money that the mortgage
bubble would burst while at the same time advising their clients to buy
mortgage-backed securities. Managers of our largest banks took on risks they
did not understand, safe in the knowledge that they were too big to fail—that
the government would have no choice but to bail them out in order to avoid a
cataclysm, or at least a deep recession. Compensation was decoupled from
performance, with failed executives tottering off onto their country clubs’
golf courses after pocketing multimillion-dollar bonuses and being awarded the
use of company jets and office facilities. . . . . . . please continue by clicking on this link
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