Interventionism

The introduction of the euro consists simply of introducing another "managed" paper currency. Whether it will go up or down against other currencies will continue to depend on how it and the other ones are managed. 

The 1922 baseball antitrust exemption ruling is one of the few remaining precedents adhering to the earlier, limited-government understanding of the commerce clause. So while some local sports fans may support further limiting baseball's antitrust exemption as a way to keep their teams from moving to another town, it comes at a constitutional price that is too high.

Economies do not subside because demand wanes--we could all use a shiny new car, or a beautiful new house pretty much any time. However, in a world where means, unlike wants, are not infinite, we have to be able to offer something in exchange. We do that by first profitably producing things other people require, at a price they are willing to pay, not by stamping our feet and making demands like a petulant 5-year-old.

So, knock down the Empire State Building and we can further increase our economic output. Of course Krugman would not want just New York City's economy to grow, so we should also knock down the Sears Tower in Chicago and the Hancock Building in Boston. If this does not revive the economy, we better start leveling entire cities; surely that will bring economic prosperity.

In the weeks following the terror attacks, calls have come from politicians and journalists to "federalize" airport security by making workers who screen passengers and baggage government employees. House Minority Leader Richard Gephardt and others in Congress have declared that "passengers won't feel safe again" unless the government takes this step.

It comes as no surprise that governments spend more money and regulate more actively during crises--wars and economic bailouts are expensive and complicated. But a more active government also attracts opportunists, who perceive that a national emergency can serve as a useful pretext for achieving their own objectives. 

No government can live up to its billing as a semi-divine problem solver. Government intervention is not an alternative to the market; it merely creates a different kind of market full of con men selling very sour lemons.

While the politicians and their media allies prattle on about "winners" and "losers" in the Microsoft antitrust case, they miss the larger story, one that has become a typical American tale: the ongoing assault of the Leviathan State upon the once free and productive business sector. 

The publication of David DeRosa's latest book is all the more timely given the financial crises and stock market crises that littered the 1990s. The problem with DeRosa’s book, however, is that his solution offers no hope for stabilizing the system. Nicolas Bouzou reviews In Defense of Free Capital Markets.

The Free Market 19, no. 11 (November 2001)