Sunday, March 08, 2009

Dear Mr. Rich

Today's Frank Rich opinion in the NYTimes brought out a comment from me. Here is what I posted.

Before the bubble burst, during loan negotiations from my local bank, I thought they were going to require me to give blood and hand over my first born. Now, I understand my local bank is sound while wilder, more speculative but significantly larger banks are at risk of default.

The current crisis pales in comparison to a greater threat we overcame recently: Communism. The economic structure of communism was a threat to the foundation of capitalism. However, planned economies, no matter how many 5-year plans, could not out perform the randomness of free markets, and by the last quarter of the previous century, this became evident even to the most common of men in all countries of the world. Communism died without the bloody necessity of the Second World War against fascism.

Tyranny will be with us as long as the power > corruptions connection holds true, but threat of a change in the structure of our economy has passed – for now. What we didn't tell all those peoples that chose free markets over a planned economy was a good cop/bad cop form of self-regulation known as boom and bust.

Planned economies remove the busts, everyone shares equally, we all suffer equally together, but they also remove the booms, and this is what gave free markets their edge in the recent competition. Right now, it's hard for us to remember that when the next boom comes, it will return more than was lost in the bust – and for longer too.
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