BY SHELDON RICHMAN • PUBLISHED: 3 APRIL 2009
Sheldon Richman is the editor of The Freeman and “In brief.” He is a contributor to The Concise Encyclopedia of Economics (“Fascism”).
We expected little of sense to come out of the G-20 summit, and it met our expectations with flying colors.
When you don’t understand how the economy got into a mess, you are not likely to understand how it can get out. Politicians either can’t or won’t graps the key fact: “the free market” did not cause our problems. How do we know this? It’s logic: the nonexistent cannot be the cause of anything. I’d like someone to show me this free market that brought on all the current turmoil. Please. The banking industry gets most of the blame, but banking has been part of a formal government-sponsored cartel since 1914 and is regulated, as well as privileged, by multiple layers of authorities, among them the Federal Reserve, the Federal Deposit Insurance Corporation, and the Comptroller of the Currency. An international agreement among the major central bankers, the Basel Accord, controls capital requirements and related matters. (Before 1914 a patchwork of regulations existed.) And let’s not forget the regulators in the states. With perhaps a local or exception or two, there has never been an unregulated banking industry in America (or most anywhere else).
This only scratches the surface of the corporate state’s stewardship of the economy. But politicians, who wield power and spend coercively acquired money for a living, have no incentive to see this. How could they? That’s not how the game of politics is played. They have no reason to see things in a way that would counsel against their exercising authority.
So, with complete predictability, the Gang of 20 promised to spend over a trillion dollars they don’t have to “stimulate” the world economy, to help struggling countries through the IMF (its record is so good at that), and other noble purposes. The G-20 also endorsed worldwide inflation by central banks and promised—I love this one—to “take action against” tax havens.