James Forsyth James Forsyth

A distorted cause

I’d recommend to everyone today’s editorial in the Washington Post. I’ve posted a couple of key extracts below but if you have a couple of minutes it really is worth reading the whole thing, it is a fantastic corrective to the current narrative about the causes of the crisis:

“[T]he problem with the U.S. economy, more than lack of regulation, has been government’s failure to control systemic risks that government itself helped to create. We are not witnessing a crisis of the free market but a crisis of distorted markets.

We’ll never know how this newly liberated financial sector might have performed on a playing field designed by Adam Smith. That’s because government interventions of all kinds, from the defense budget to farm supports, shaped the business environment.

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