Is the United States no longer the global beacon of unfettered, free-market capitalism?
In extending a last-minute $85 billion lifeline to American International Group, the troubled insurer, Washington has not only turned away from decades of rhetoric about the virtues of the free market and the dangers of government intervention, but it has also probably undercut future American efforts to promote such policies abroad.
“I fear the government has passed the point of no return,” said Ron Chernow, a leading American financial historian. “We have the irony of a free-market administration doing things that the most liberal Democratic administration would never have been doing in its wildest dreams.”
The bailout package for A.I.G., on top of earlier government support for Bear Stearns, Fannie Mae and Freddie Mac, has stunned even European policy makers accustomed to government intervention ”” even as they acknowledge the shock of the collapse of Lehman Brothers.
“For opponents of free markets in Europe and elsewhere, this is a wonderful opportunity to invoke the American example,” said Mario Monti, the former antitrust chief at the European Commission. “They will say that even the standard-bearer of the market economy, the United States, negates its fundamental principles in its behavior.”
I have no love of AIG, since they were the insurance company that my former employer had when I got injured on the job. Thanks to them, I NEVER got the back pay that I was due. I only got a fraction. God forgive me, but I’m glad they had to go belly up and get help; maybe it’ll teach them a lesson about caring for the people they give insurance to.
From my angle, it looks like even capitalists like socialism once in a while.
#2,
Fallen man will always seek to socialize risk and privatize profit. This is why government should be kept small: so it can’t socialize risk on net tax producers and allow politically favored groups to privatize profit. From immigration to foreign wars to welfare, that’s what government does.
John’s right, which is all the more reason government should be at an arm’s length from the private sector. Fannie Mae and Freddie Mac have been the target of free-market criticism for decades for just this reason, and now we’ve been proven right yet again.