Wednesday, March 11, 2009


Thomas Woods, Jr., author of Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse, spoke recently with InsideCatholic's Brian Saint-Paul.

The whole interview is well worth the read, but I found this bit particularly interesting:

So you're saying that the "breakneck deregulation" we've heard so much about is largely a myth?

Most of the alleged deregulation people complain about is completely phony. Suppose you have a government monopoly like the post office and say, "Ok, we're going to deregulate the Post Office. From now on, the Post Office can charge $100 for a stamp." That's not really deregulation. Full deregulation would say, "We're going to deregulate the mail business so that no-one is prevented from entering it by regulatory barriers." Now that would be real deregulation. Try selling $100 stamps in that arrangement and see how that goes for you.

What we've had in recent years is phony deregulation. Banks are allowed to engage in riskier behavior than they were before, but the government will continue to guarantee their deposits with deposit insurance. How is that deregulation? In effect, you can do riskier things but the public is still on the hook for your errors. Real deregulation would say that you can do risky things, but you're on your own. We haven't had that. We've had the worst of all possible worlds.

It's been my experience in looking at issues like abortion and global warming that you're on the right track when your reasoning leads to conclusions that neither side is particularly happy about--and based on this interview, I'm getting a feeling that Woods is on the right track. (The "phony deregulation" he describes above is, by and large, a product of the Bush administration--and elsewhere in the interview, he systematically dismembers the popular right-wing claim that the Community Reinvestment Act is primarily to blame for the collapse.)

I wasn't aware of Woods' book before, but it's definitely on my reading list now.


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