Crisis of faith in the free market

Could Enron and other corporate disasters mean we will actually start to realize that government has a part to play in the regulation of life and in the protection of social values?

The Straight Goods Cyber Forum
with Larry Solway

Commentary:

  Is The System starting to unravel? Is it possible that the verities and axioms and absolute truths of "The Marketplace" are becoming unhinged? Is Free Enterprise coming apart at the seams?
  Howard Kurtz of The Washington Post writes: "It has become a challenge to keep track of all the resignations, indictments, guilty pleas, lawsuits, book-cooking, insider trading, accounting fraud and old-fashioned chicanery. Even Martha Stewart, the doyenne of domestic bliss, has been dragged into one investigation."
  Stir in some Ernie Eves trying to make nice by backpedaling on Hydro privatization. Add a dash of Paul Martin sulking a little then rallying his marketplace forces for the push to Prime Minister-ship of Canada. Ladle in a little chagrined Jean Chretien promising to stay the course and hoping there are still enough old-fashioned Liberals around to keep him going. Just to put the icing on the economic cake, the stock market has become even more of a financial playpen than it ever was. Los Angeles Times says: "Allegations of illegal and tawdry behavior by executives have become an almost weekly spectacle, shaking investors' trust in the nation's business leadership and prompting criticism that a new era of greed has tainted corporate America."
  The Toronto Star carries on relentlessly with: "David Rosenberg, chief Canadian economist and strategist at Merrill Lynch said market sentiment is now so negative that stocks could rally temporarily over the next one to three months - provided markets get the catalyst they need. Which is true to the stock-market-is-everything standard of financial ethics. It suggests that the holy and sacred market needs to be buoyed up by rate cuts from the Central Bank. (In fact, Wall Street is murmuring that the feds will lower rates to stem the tide.) It is shocking that the central banks react to the bloated interests of money managers, even though Alan Greenspan has declared that he is not in business to bail out the stock market.

Can anything be done (or should it) to save Capitalism? If you believe that "money talks" then you should also believe, fruitlessly I'm afraid, that government should be the final judge

And before I let it go, Merrill Lynch, where Rosenberg speaks, has already paid out about $100 million because they admitted their own people were touting stocks they had underwritten while saying privately that the securities were dogs.
  Can anything be done (or should it) to save Capitalism? If you believe that "money talks" then you should also believe, fruitlessly I'm afraid, that government should be the final judge. Acting on behalf of people, not on behalf of business, government could, for example, have stepped in to freeze all the assets of people like Law and Skilling, who walked away with millions while the poor souls in the trenches saw their entire retirement savings balances go down the drain.
  As if reading my mind (or sneaking a look in my computer) the Globe and Mail, my favourite apologist for Free Enterprise, headlines Report on Business: Stock, currency markets rocked! It gets better. The article continues under the heading "Love Affair With Capitalism Fading?" They go on, mimicking everything I wrote before I read their business stuff: "James Grant, editor of a widely followed Wall Street newsletter, believes the U.S. two-decade love affair with capitalism is fading." It gets even better as Grant predicts: "the U.S. middle class will begin to vote for policies that curb the excesses of free markets!!" (Exclamation marks mine.)
  Which means, heaven forefend, that the enthusiasm of free-market devotees - fans of the Wild West approach to making money, the almighty American anti-government sentiment - is fading. Could it actually be that many Americans, and by osmosis Canadians, will actually start to realize that government has a part to play in the regulation of life and in the protection of social values? What next? More unions? Same sex marriage? Higher taxes? Deficits to close the imbalance between the rich and the poor? It's one thing to see the "love affair with capitalism fading", but it's quite another to suggest that True Believers start demanding more intervention.
  The question then becomes: "do perilous times bring out the demand for more supervision and oversight by government?" I think it might. But it may be too late for America, which has already put a Texas oilman and ravager of the environment into the White House.
  If Washington wanted to demonstrate concern about the buccaneering style of the stock market, it would long ago have intervened. But whoops! It might have to put Vice President Chaney on a fraud watch since during his reign as CEO of Halliburton Oil he presided over some nifty bookkeeping that saw hundreds of millions if dollars vanish. If they cared they would have frozen the bank accounts of guys like Skilling and Lay who made millions while lesser Enron employees watched their retirement savings disappear.
  I confess. When I sold my house I moved to an apartment in downtown Toronto and I put the entire proceeds of the home sale into relatively safe market investments. A friend of mine twitted me for it, suggesting that I was supporting the very things I was against.
  The fact is that I, like many other slightly fallen Lefties, have always believed in the system that puts capital to work to create jobs and goods and services and increase the wealth of the community. The fact that the system has been perverted, subverted and distorted by get-rich-quick schemers does not diminish the value of the system. Hey - even Buzz Hargrove can't avoid the reality that his union workers depend on the survival and prospering of the manufacturing system. Without profits there are no wage increases. But that's a whole other story.
  I'm just glad that the Globe and Mail is coming around. But maybe it's just because it is now fashionable, in the wake of the lying, cheating and rigging of books, to ask for governments to do something. Anything!

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