Commonwealth Foundation

Greenspan’s “infinite monkey theorem”

Did the free market fail? Well, that seems to be what Alan Greenspan, the former Federal Reserve System chairman, said yesterday to Congress. But before we follow the lead of those in Congress who are using Greenspan’s comments to exert more government control and regulation of our economy, we should consider whether the free market failed.

First, the notion that Greenspan is a “free-marketeer” should be disabused. How could he be given his role with the government as a central planner of the economy? Indeed, in a free-market economy, there would be no such thing as the Federal Reserve, with a handful of people making decisions that affect the entire economy of the United States and, ultimately, the rest of the world.

So while Henry Waxman and other central planners are having a heyday with Greenspan’s comments to condemn capitalism, Pepperdine University Professor Emeritus of Economics George Reisman reminds us that:

the politico-economic system of the United States today is so far removed from laissez-faire capitalism that it is closer to the system of a police state than to laissez-faire capitalism. The ability of the media to ignore all of the massive government interference that exists today and to characterize our present economic system as one of laissez-faire and economic freedom marks it as, if not profoundly dishonest, then as nothing less than delusional.

So, no, Mr. Greenspan, it wasn’t the failure of tens of thousands of people simultaneously making bad decisions in a free-market economy that caused the current financial crisis. That would be the economic equivalent of believing the “infinite monkey theorem” — that a monkey randomly typing for an infinite amount of time could produce the complete works of Shakespeare – caused the problem.Wouldn’t it make far more sense that our financial mess is the result of the poor decisions by the central planners at the Federal Reserve and in Congress?

Of course, I argue that the economic crisis is a failure of government, not deregulation, and Mr. Greenspan deserves plenty of blame-not for his unyielding commitment to the free market, but for his abandoning it as the central-planner-in-chief.

Cross-posted at Capitol Domes.

Beyond the Bailout

The National Taxpayers Union (NTU) and Competitive Enterprise Institute (CEI) have a new website: BeyondBailouts.org.  The site is dedicated to exposing the government’s role in creating the financial “crisis”, as well as promoting solutions that go beyond the financial bailout (and should have been done instead of the bailout).

BeyondBailouts on What do We Do Now:

As markets and businesses take corrective action themselves for the excesses of the past few years, there are things that Congress can do to address some of the root causes:

• Privatize Fannie and Freddie
• Prosecute Corrupt Officials
• Suspend Destructive Accounting Rules
• Repeal the Community Reinvestment Act
• Clean Up the Tax Code

Instead of shoveling more taxpayer money into the bailout hole, Congress should change the government policies that helped create this mess in the first place. That means privatizing Fannie Mae and Freddie Mac, reforming destructive accounting rules, and getting rid of lending laws that force banks to make bad loans.

The site features an email sign-up, a petition to Congress, videos, and a blog. One of the best posts for today is Deregulation Didn’t Do It, via the Heritage Foundation.

One rotten Acorn?

GrassrootsPA has a roundup of stories on the Philadelphia man, working with ACORN, who was charged with 108 counts related to forgery and fraud in voter registration.  In the Tribune-Review Story, an ACORN spokesman call it “a case of one bad apple.”

Of course, eating the number of “bad apples” that ACORN has produced would probably be as hazardous to your health as eating an actual acorn.  (NOTE: after further research, my metaphor is flawed, as eating an acorn is not hazardous to your health.  I was thinking of buckeyes, which are poisonous.  Coincidentally, the Buckeye Institute has filed a Rico suit against ACORN).

In related news, the Pennsylvania GOP has launched a new site – www.wewantafairelection.com.- aimed at reporting voter fraud.  Right now, there isn’t anything useful on there, but there might be by election day.