Paul Krugman hit the nail on the head today with his Op-Ed. It reminds me why I like him in the first place. For those of you too lazy to click through to the essay and read it, I’ll give you a summary. Krugman says that our policy makers continue to be blinded by the mythology developed by Milton Friedman and others and popularized by Reagan. They think the financial system is fundamentally sound, and the recent collapse is wholly due to public misperception. That is why the Summers/Geithner plan rings hollow in a progressive’s ears. A progressive knows we have to move past the culture of greed and bonus, of growing wealth disparity and opt-out attitudes, but Summers and Geithner don’t get it.
For that matter, it doesn’t seem like a lot of bankers get it either. They think, like Jake Desantis, that the rest of the country’s anger is unfair. (You know what I think about this guy.) “We worked hard to be much richer than you,” the argument goes, “so it is mean spirited of you to take away our money.”
The emotions created by this mess are a clue about markets. Markets are not super-human intelligences. They are not fair and even-handed arbiters of merit. They are systems created by people, for people, just like schools, or governments, or knitting circles. The anger of the Market’s defenders is rooted in an existential angst. Rather than take blame for benifitting from a rigged system that has now failed, the defenders of free markets think resentful peons are trying to kill their god.