Some people (even some smart people) actually believe this, Article: Capitalism is killing our morals, our future

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This is one of the worst pieces written by Paul B. Farrell at Marketwatch.com, and he’s written some pretty bad pieces.

In the attached article, Mr. Farrell examines the thinking of professor Michael Sandel at Harvard who laments that markets have run amuck, and that “everything is for sale.”

Professor Sandel (and Farrell) argues that the reason for our economic downturn was the inherent dysfunction of markets. That crass greed overcame our better collectivist inclinations which ended in a collapse.

This is pig farm run-off. The reason 2008 happened was not because markets were unfettered. As an investment professional during the Crash I can tell you there was a ton of red tape wrapped around everything we did. Markets were and are highly regulated. Where do you think the Community Reinvestment Act came from which was a big piece of why housing crashed?

It was a regulation (sent from on high) which encouraged lenders to lend in areas which didn’t meet underwriting criteria. The market said “Don’t Invest Here!” But the politicians didn’t like what the market was telling them so they sought to override the market, with predictable results.

This is just one example. To call the economy in the United States a “free market” is an absolute joke. That Paul Farrell can wax on like it either reflects a rather profound ignorance of the classical kind, or of the willfull kind. My bet is it’s the former.

Professor Sandel also is teaching his students at Harvard “by the thousands” that markets are somehow a bad thing. That accurate valuations of goods and services is bad. Indeed what he is saying is that he’d prefer areas of the human action not be open to analysis of value. “Everything is for sale” he says.

But that’s not true. Everything may have a value. But everything is not for sale. It is the people who understand this who I find to be the best adjusted on the planet.

What both Farrell and Sandel argue is that there are areas of human endeavor which should remain fuzzy and opaque and not subject to what they perceive as the harshness of the market. This strikes me as an oddly anti-intellectual position for Mr. Sandel particularly. He’s an educator. On a quest for truth!  I thought.

This is not to say that I think everything in life should be thought of in terms of it’s economic value. That takes too much brain power and spending a life analyzing every move like that is pretty much a waste of time. Plus it’s no fun.

But to say that “capitalism” is somehow a bad thing, to say that the voluntary exchange of goods and services without outside coercion is bad and conversely that bending markets to the will of some faceless government entity is good, is flat out ridiculous.

Capitalism, the voluntary exchange of goods and services free from coercion, is not only the most efficient way to create wealth for all, it is also the most moral system for the economy. When individuals are free to exchange goods and services freely prices come down and better products and services emerge. It’s actually pretty amazing that it works this way. We should be thankful and where possible moving our economy closer to this ideal.

Yet some not only reject freedom in the economic sphere, they don’t understand (or accept) that the system we live under currently is a top down, crony capitalist, occasionally starkly socialist system. Show me 1 free market in a good or service which is legal. Nowadays one can’t sell lemonade without a permit, and the sugar one puts in it is subsidized by the taxpayer. The lemons probably are too.

So Mr. Farrell and Professor Sandel, if you guys don’t like how the current economy is acting, perhaps it’s time to reassess. Is it “capitalism” which is corrupting our society, or is it in fact the absence of capitalism?

Somehow I don’t think they’ll see the light.

Click here for the article.

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