Thoughts on the Financial Crisis
October 23, 2008
I gave a talk to a Memphis-area discussion group last week and posted an article based on the talk here. Here’s the penultimate paragraph, which contains a few useful links:
In his excellent essay “An Open Letter to my Friends on the Left,” Steven Horwitz explains how government intervention rather than free-market capitalism has created the present unpleasantness and argues that deregulation, rather than an increased scope for government, is the appropriate way to deal with the crisis. In an earlier essay on inequality, Horwitz argues that before asking the “oughts” of ethics, we have to consider the “cans” of economics. The present crisis is humbling: it illustrates the unfortunate consequences of what F.A. Hayek called “The Pretence of Knowledge.” A mixture of political incentives, hubris, and a desire to “help those in need” combined to create a financial disaster in which “those in need” are finding themselves worse off than they were before their anointed benefactors decided to lend them a helping hand.
