Free Markets Series E2: Sound Money and Capitalism
In order to have better economic policies, defenders of capitalism need to answer some of the common questions people have about free markets. That is just what Steve Forbes tries to do in this thought‐provoking interview, and in his latest book, How Capitalism Will Save Us.
Many people, for instance, see the Great Depression as a failure of free markets, whereas it was actually a failure of government policy. The same goes for the 2008–2009 crisis, whose primary cause Forbes identifies as the Federal Reserve printing too much money. He also argues that it was wrong for the government to pursue stimulus spending, which ultimately must be paid for by taxpayers: “Politicians take resources from you, put it through the political sausage factory, spit it out in a very inefficient way, and that’s supposed to stimulate an economy. It does not.”
Nor do we need thousands of pages of new rules to protect us from fraud, which Mr. Forbes points out is already illegal. “[I]f somebody’s determined to do something wrong, paper walls are not going to be very effective at stopping them. What [Sarbanes Oxley] did do was make it extremely expensive for small companies to achieve profitability and to go public.” The original problem is unaffected, but a new problem is created, as is often the case with burdensome government regulations.
In addition to crises old and new, viewers will learn that political leaders are not eager for the discipline of the gold standard; that innovation, although disruptive, is the very source of prosperity; and that capitalism is moral because it encourages us all to attend to the needs of others.