I know I’ve read some version of these first two paragraphs several times, even in the last year, and even critiqued one or two previous pieces. It seems nearly inevitable that the New York Times “Week in Review” will begin a story on the week’s economic news with some version of the “end of laissez-faire” thesis, which is always the same: until now we’ve had this huge and doctrinaire faith in free markets but now events are forcing us to realize that government has a role to play and so we must now adjust to the fact that the market is not all it is cracked up to be.
The problem is always the same: a complete denial of reality, and not just today’s reality but the reality for, say, the last 100 years in which we have not had free markets but some sort of interventionist state. But no matter how big the government is, how much it intrudes and distorts the markets, no matter how much it has subsidized failure, and been an essential cause of economic trouble, the New York Times is always ready to announce the “end of laissez-faire.”
So I present to you this week’s rewrite:
Is this the end of hypercapitalism?
For nearly a generation, the United States has driven growth by deregulating markets, lowering tax rates and promoting trade. Across wide swaths of the economy — from airlines to banks to energy to telecommunications — Washington stood aside, believing less regulation would produce broad prosperity, even at the cost of greater income inequality.
Now, with Washington setting aside $700 billion to bail out financial companies, the economy weakening daily and the Democrats likely to enlarge their majorities in Congress, it may seem that the United States is shifting away from faith in markets and distrust of government.
What purpose does this thesis serve? It seems obvious to me: it means never having to blame government for anything but doing too little.