More Compelling Evidence That Free Market Capitalism Doesn't Work Without Government Regulation

In this week's New Yorker, there is a great article about changes in thinking and theory in the Chicago school of economics, which for 60 years has been the theoretical foundation for unfettered free market capitalism. Remember Milton Friedman -- "there is no free lunch" (unless you're a lobbyist or corporate executive with the company's credit card)? Now one of the University of Chicago's leading economics thinkers, Judge Richard Posner, is quoted:

We are learning that we need a more active and intelligent government to keep our model of a capitalist economy from running off the rails. The movement to deregulate the financial industry went too far by exaggerating the self-healing power of laissez-faire capitalism.

Another leading University of Chicago economist, Raghuram Rajan, writes, "the initial causes of the breakdown were stagnant wages and rising inequality."

This last quote is amazing! Now we have a leading University of Chicago economist making the key economics rationale for quick passage of the Employee Free Choice Act.

Wages have been stagnant and/or declining for 30 years because of policies rooted in laissez faire capitalism and economics: privatization, de-regulation, de-industrialization, union busting, and the destruction of the freedom to form unions and bargain collectively. So for an economist from the school most responsible for those policies to say that those policies created our recession and economic crisis is hugely significant.

As frustrating as this period of time is, there are deep, very important changes taking place in America. Keep pushing, keep fighting!