Archive for the ‘Markets’ Category


February 20, 2017 Leave a comment

This post is part 3 of my series on why I am no longer an anarcho-capitalist (ancap).

One thing anarchism has given me is a relentless desire for freedom–not just for myself, but for everyone. It has extended to my personal relationships and to the food I eat, as I believe animals are just as worthy of liberation as humans. I think equality is an essential part of freedom.

Ancaps tend to shy away from the word, as if “equality” meant conformity, or sameness. No anarchist believes in a Harrison-Bergeron state, where people with talent are fettered so others don’t feel bad. All equality has to mean is having an equal say in the decisions that affect you. We do not have that now, as most people are locked out of the political process, and we do not have that under any hierarchy. In the moneyless, propertyless society anarcho-communists and others envision, there would be no inequality of wealth, either, as everyone would share and thus have equal access to everything. (More about this in my next post, on property.) Ancaps tend to assume, as I used to, that there is no particular harm in inequalities of wealth if no one has control of the state’s tools of violence, and that attempting to reduce inequality is a pointless distraction. I think this belief is mistaken. Tolerating inequality is dangerous, particularly under a state but even in a stateless society.

Some ancaps invoke an analogy of Robinson Crusoe to justify exclusive ownership or private property. Alone on his island, Robinson can do whatever he likes. But when Friday comes along, now there are two people and things need to be divided among them. If Robinson spends time making a fishing net while Friday basks lazily in the sun, Robinson should own the fish he catches and should not be obliged to give any to Friday. This situation is plausible on a desert island. But that analogy can take us no further than a new society of able-bodied people who start with nothing. Our world is a world full of established order, of force and violence, of wealth acquired by force and inherited for generations. It is a world where laws, regulations, taxes and, underpinning it all, unequal access to resources have made it impossible for many people to earn a living wage, and yet where ancaps tell people whatever “the market”–not the ideal free market but the market as it is now–dictates their wage should be is correct.

Ancaps will tell you “no one owes you anything”, to the effect not of proposing ethics for a free society but to justify the market and property relations of today. They speak as if most CEOs and rich people were simply workers who had worked particularly hard and somehow deserved not only their enormous salaries but the power over workers and politicians that position brings with it. They do not appreciate that a major feature (some might say the defining feature) of capitalism is how the people on top own the product of a worker’s labor and then give as little as they can get away with back to the worker. If you produce $50 worth of widgets in an hour and make $10 an hour, the corporation has taken most of the value of your product away. That is what socialists mean by exploitation. If you are a fly-by-night employee working for people who have put many years of sweat into their business, this arrangement is not problematic. However, if a hundred people have run a factory for years, they are the true source of the wealth of the owners and bosses. Yet, if they attempted to take over their factory, ancaps would say they are stealing, and violence is a justifiable response.

The capitalist corporation

While I think abolishing the state would significantly reduce the power of the rich, if they are simply left alone, they could easily find a way to reconstitute the state in a different form. Capitalist enterprise always sends money up the hierarchy. Retaining hierarchy, the money system and unequal access to resources could make it profitable to raise a private army. While most anarchists envision a society where everyone’s needs are met, many ancaps simply assume this situation would arise if we eliminated taxes and barriers to work. But what if it did not?

Theft would still be an issue, which means security guards would still work in the employ of the rich. Whether or not security guards became a private army, the employment of security guards is a highly inefficient way to allocate resources–protecting wealth rather than creating it. Why would that situation be preferable to more equality, more access to what we need, less need for protection from either theft (for the rich) or predatory armies (for everyone else)? How can you justify turning someone away from a hospital or denying them life-saving drugs when there is easily enough money to pay for it? How can you justify letting someone go hungry when supermarkets owned by rich people are full of food?

Another problem with the current economic system, whatever you want to call it, is it necessarily produces winners and losers. It inherently–not incidentally–produces unemployment, homelessness, poverty, debt and non-state violence. These effects are not due to lack of hard work. I think most ancaps, at least thoughtful ones, understand this point. What it means in practice is, as unfortunate as it might be, we need welfare programs. Yes, there are better ways of providing them, but until you are helping organize mutual-aid arrangements, please do not encourage the dismantling of programs that help people keep their heads above water.

On a related note, while I sympathize with the desire to abolish the Federal Reserve, the federal income tax or intellectual property, these things are simply not going to happen while power is still concentrated in the hands of the rich. The people who are really in charge benefit from these things, which means that even on the off chance a large majority of voters agreed with these policies, the system would perform as it always does on such occasions: Politicians would talk about the need to “do something”; they would either pass a law hailed as monumental or complain about being stymied by the president, the Congress, the courts, the pressure groups or whomever else; if they were successful in passing the bill it would be too watered down to have any significant effect or it would be quietly repealed a few months later and things would somehow return to how they were. That is why the slogan “evolution, not revolution” does not take the workings of the system into account. A popular revolt can topple a government in a matter of days, and has often led to anarchy. If people have the right ideas and initiative, they can create a free society in this situation.

More people in our world need to learn about humanity’s long history of mutual aid. Charity may be necessary in a world where we do not organize and take care of each other but we will not have a revolution worthy of the name without mutual aid. Charity is only necessary because of the systems of exclusion and exploitation that destroyed mutual aid. Charity is a top-down approach.

Rich people are not generous just because they give money to charity. They may have made their money through inheritance, the violence of the state (eg. intellectual property) or simply by having enough capital to start and maintain a business, paying workers as little as possible and keeping the rest. Anarchists advocate a non-hierarchical, non-paternalistic, empowering approach to solving our problems, not one where you can give a small amount of your enormous wealth away and be called a public benefactor.

I have written more on this subject in another post. Suffice to say, inequality is not “good” or “natural” and ancaps should learn about the dangers it poses to freedom.

The problem with inequality

October 18, 2014 1 comment

The state is a tool to create a ruling class of people who acquire their wealth through theft. Inequality means those who have can buy protection from those who do not, and that tends to lead to repression in the form of police states or slavery. The state cannot, by its nature, eliminate inequality. But what if we abolished the state, as anarchists want? Would inequality still matter? I used to believe inequality was not a big deal, or it only mattered to jealous people. I was wrong. Here are three reasons why, especially today but even in a stateless society, inequality is an issue of major importance.

-Psychological effects

Studies suggest we have an innate desire for equality and fairness. The UK Mental Health Foundation finds that living in an unequal society causes psychological and physiological changes. Inequality can lead to a constant “fight or flight” reaction and perpetual stress. It can lead to violence directly through increased crime (including homicide), and can also create the conditions in which violence festers: less trust, disintegrating families and communities, poor scholastic and work performance and mental illness. The US and the UK, the most unequal societies in the rich world, show the strongest symptoms.

So much for those of us on the bottom of the pyramid. What about those on top? People with relatively large amounts of power and wealth are known to take on the characteristics of psychopaths. Compassion, empathy and sense of guilt decrease (“why don’t the poor just work harder?”); narcissism and entitlement increase (“of course I deserve to be where I am”); rules become for other people (“survival of the fittest”); lying and manipulating become easier; irresponsibility becomes the norm; and the desire to accumulate overrides other goals. (Find more here, here, here, here and here.)

-Structural violence

Structural violence is a kind of indirect violence whereby social structure and institutions prevent people from meeting their basic needs. Intellectual property laws that prevent people who need medicine from receiving it are one example. Borders preventing needy people from entering places where they could make a living are a second. Hoarding food or means of sustenance and surrounding it with fences or security guards is a third. Excessive debt, certain forms of discrimination, structural unemployment, poor working conditions and even just beliefs in the rightness of social hierarchy are further examples. Hellen Keller became a radical socialist soon after she realised blindness and other handicaps were mostly concentrated among the lower classes. A considerably inequitable social structure could lead to structural violence.


The modern state is both a cause and an effect of the endless accumulation of wealth. Historically, it has not been possible to create and maintain vast fortunes without violence. Primitive states were forged in conquest to accrue and protect fortunes at the expense of their subjects, and modern states continue to exist for this purpose. (The actions of the so-called Islamic State mirror the actions of a primitive state.) Capitalist states emerged to protect and privilege those who made their fortunes as owners of capital, and while not all of “the 1%” want to use violence to make or expand their wealth, all benefit from and most refuse to question the violence of the system. A hierarchical or unequal society would make it possible for new states (or other forms of violence, such as human trafficking) to form. A stateless society should have safeguards against such a possibility.

-Protecting ourselves from the unequal society

The people of an anarchist society must protect themselves against the mental stresses and violence of unwarranted privilege and the potential reemergence of a state. My suggestion is a very widespread feeling of solidarity: the idea that we are all of equal inherent value and have no right to rule others; taking care of those in need; organisation based on mutual aid, including, of course, self defense. Sufficiently large numbers of people skilled at wielding modern weapons would make it easier to prevent the rise of a new state. We will be truly free when those around us are free, and we will only achieve freedom by working together.

The Black Panthers offer a model of an egalitarian community organisation. Imagine a confederation of them.

The Black Panthers offer a model of an egalitarian community organisation. Imagine a confederation of them.

It is not necessary—in fact, it is contrary—to enforce a state of equality. Benjamin Tucker wrote that the word “socialism” scares people because so many others think one can dismantle privilege by destroying competition and centering production in the hands of the few. But as he went on to point out, as Mikhail Bakunin had years before, anarchism is socialism without the state. If we organise to make decisions together and take care of each other, we have no need for authority. It is not necessary to kill rich people but simply to eliminate the system of violence that privileges them. Laurance Labadie once said “[i]n a world where inequality of ability is inevitable, anarchists do not sanction any attempt to produce equality by artificial or authoritarian means. The only equality they posit and will strive their utmost to defend is the equality of opportunity. This necessitates the maximum amount of freedom for each individual. This will not necessarily result in equality of incomes or of wealth but will result in returns proportionate to services rendered. Free competition will see to that.” Market anarchists might take this to mean freed markets and free association. Gary Chartier explains here and in Markets Not Capitalism, freed markets can work to abolish wage labour and corporate hierarchy as the main form of economic organisation, as well as the formation of a dominant class. (You may want to follow the links provided to read his proposals as to how to work toward such conditions.) He goes on to point out that those who protest in the millions against capitalism are not opposing private ownership and free exchange but a system that exists to grant the owners of capital a huge amount of power over society.

The future will be determined by what we value and why we value it. If we value equality as a means to freedom, we can have both.

Second edition is published

July 9, 2013 Leave a comment

The second edition of the Rule of Freedom: the Manifesto of the Sovereign Community has been published. The full volume is now available for free here.

Spontaneous order as an alternative to imposed order

April 18, 2013 13 comments

I think tearing down the state would be one of the best things humanity could do for itself. I know most people disagree, but I wonder if that is partly because they don’t know much about spontaneous order.

One of the main reasons we still have the state is humans have a bias toward needing to feel in control. We believe not only that we can control our surroundings but that we should. Control means order, right? The more control we have–over the whole world, ideally–the safer we are. The theory of spontaneous order demonstrates the shortsightedness of this argument (as does the incredible damage the state has done to the world since its inception).

Spontaneous order is one of the most powerful forces in the universe, but most people do not know it by name. Spontaneous order, or self-organisation, has been used to explain the expansion of the universe and the movement of celestial objects, the evolution of life on earth, the formation of snowflakes and crystal structure, the activities of cells, ant colonies, beehives, flocks of birds, language, culture, markets and cities. It is the order, contrary to what we tend to expect, that arises when we stop trying to control things and let them be. A single ant could not direct an ant colony; a beehive is not run by a committee of bees. Likewise, central planning fails miserably while free people build wealth for themselves.

spontaneous order

When people are freed from whoever is constraining or oppressing them, the norm is not rioting and Hobbes’ war of all against all. It is people peacefully cooperating to do what they agree is important. Look at what happens during revolutions. Look at what happens during wars. When all law and order break down, to the extent they can, people often work together, because they need each other. Spontaneous order is the phenomenon that explains it. Never mind humans; when anything, particularly life on earth, is left alone by outside or artificial constraints, it tends to flourish.

As far as we know, the idea dates back to ancient China. Here is something Laozi said over 2000 years ago.

The more laws and restrictions there are,
The poorer people become.
The sharper men’s weapons,
The more trouble in the land.
The more ingenious and clever men are,
The more strange things happen.
The more rules and regulations,
The more thieves and robbers.

Therefore the sage says:
I take no action and people are reformed.
I enjoy peace and people become honest.
I do nothing and the people become rich.
I have no desires and people return to the good and simple life.

Statism is just one idea for organising society. The state is very good at fulfilling its purpose: concentrating power in the hands of a few people: once kings and courtiers but now politicians, top bureaucrats, heads of the security apparatus and corporate clients. But it is not good at leaving people alone to reach their potential.

spontaneous order hierarchy network

When we are free, economies thrive, because individuals are far more empowered and responsible. Science and technology speed ahead. The most free and open complex societies in history are the ones that made all the most important advances in knowledge and the arts—not China in its days of oppression but in its days of openness. Not in today’s Middle East with its corrupt dictatorships but in the Middle East that advanced mathematics, astronomy and medicine and saved all the books the Europeans had thrown out as blasphemous. Not that Europe; the Europe since the beginning of the Enlightenment. But not the Europe of today, either, with its seemingly endless regulations, bureaucracy and welfare state. Europe used to consist of many small states with little power to regulate their societies. As Hans-Hermann Hoppe puts it,

Contrary to orthodoxy, then, precisely the fact that Europe possessed a highly decentralized power structure composed of countless independent political units explains the origin of capitalism—the expansion of market participation and of economic growth—in the Western world. It is not by accident that capitalism first flourished under conditions of extreme political decentralization: in the northern Italian city states, in southern Germany, and in the secessionist Low Countries (Netherlands).

People all around the world have so much wealth in their communities that, if they could own and transform however they like, could lift them out of poverty. Instead, they either do not have freedom to own and defend their property so they cannot use it, or are told not to work for themselves but to come and pick up a cheque so they can remain part of the wider economy. Their potential is still there, though. The benefits of freeing people from artificial constraints demonstrate the amazing power of spontaneous order. It is something voluntaryists and other freedom-minded people should help others understand better in order to make their case.


March 18, 2013 5 comments

“Corporate capitalists don’t want free markets. They want dependable profits, and their surest route is to crush the competition by controlling the government.” – RFK, Jr.

It is often claimed in “progressive” and “liberal” circles that we need more regulation to curb the influence and power of big business. This belief is based largely on a misconception as to the origin, purpose and result of regulations.

During the period between the end of the American Civil War and roughly the 1890s, business in the US tried to cartelise but found it could not. In general, cartels can only control a market when force is introduced. During this period, every attempt to form a cartel and raise prices led to new competitors that realised they could undercut the cartels. In response, big business began lobbying the government to pass laws “in the public interest” (as all laws are claimed to be) that would enable them to keep competitors out. It worked. (Find a large amount of research on the subject here.)

Today, regulations and other laws protecting business include corporate personhood, accounting standards, safety standards, environmental standards and intellectual property. In addition, there are subsidies (“corporate welfare”), amounting to perhaps $98b a year, selective tax breaks and contracting. In each of these categories, government and industry have made a variety of laws enabling large firms to eliminate competition. As such, they are a kind of tax taken from consumers who would pay lower prices and entrepreneurs who would be able to make their livings doing what they want. The tax is given to business owners who would be forced to lower prices or improve services in a free market. The Small Business Administration in 2005 estimated the total cost of these regulations at $1.1 trillion.

free market government regulation

Accounting standards are widely considered necessary to prove a firm is not cooking the books. But in the absence of state regulation, concerned investors would find a way to insure against this possibility with audits. An example of the enormous and unnecessary complication of accounting standards is the Sarbanes-Oxley Act, passed in the wake of the Enron accounting scandal and failure. The Act made accounting more complicated. Implementing it costs a firm millions of dollars. Millions of dollars is pocket change for a big corporation, but prohibitively expensive for new and small businesses that could otherwise rival them. As a result, fewer businesses are created, and wealth and power are concentrated in the larger firms. We now have a complex tax code that could not be implemented by less than a team of accountants. The same is true of the legal code. The modern legal code was designed so that teams of high-priced lawyers can get away with murder and people without money see no justice.

Sarbanes-Oxley is, of course, but one law in a sea of other laws. Those who say the 2008 financial crash was caused by a lack of regulation may do well to realise there were thousands of lines of financial regulations already. They often cite the repeal of parts of the Glass-Steagal Act as the only incidence of deregulation they can think of, but this change did nothing to enable banks to make bad loans. A look at the facts indicates very clearly that regulation was the main cause of the bubble that caused the massive destruction of wealth for all but those whose ties to the state got them trillion-dollar bailouts.

Negative externalities, which seem to be the reason people beg the government to get involved in the market, are easily externalised in a statist society. The same big corporations pollute and break the law repeatedly. They are sued by the government, they pay the government, which means it gets another legal donation from an interest group, and then they are allowed to continue business as usual. The lawsuits are a bone thrown to voters and the corporations shake them off like lice. But they give the appearance that justice has been done. The corporations nonetheless retain all the benefits they get from the state in the form of legal personhood, subsidies, tax loopholes, intellectual property and regulatory barriers to competition. The state does not protect us against negative externalities.

Intellectual property enables firms to monopolise virtually anything they create. Consider the effects of IP laws in the pharmaceutical industry. Kevin Carson explains that drug patents are unnecessary to recoup expenses and develop the most effective drugs.

First of all, there has been a dramatic shift away from fundamentally new kinds of blockbuster drugs, because it’s much more cost-effective to put money into tweaking the formulas of drugs whose patents are about to expire just enough to qualify for repatenting them—so-called ‘me, too drugs.’ Second, a great deal of the basic research on which drug development is based is carried out at government expense in publicly-funded universities. Around half of the overall cost of drug R&D is taxpayer-funded. And in the United States, under the terms of legislation passed in the 1980s, the patents on drugs developed entirely at taxpayer expense are given away—free of charge—to the drug companies that produce and market them. Third, most of the actual R&D cost for developing drugs comes, not from testing the version of a drug actually marketed, but from securing patent lockdown on all the other major possible variants.

Generic drugs do not get developed, or get banned as soon as they are, because they are competition. The poor people who need them most do not get them. Intellectual property, Carson concludes, is murder.

corporatism regulation big business free market

We can divine the purpose of regulation from its results. We now have giant, multinational corporations straddling the Earth, with no government willing or able to oppose them, with the exception of a few populist, anti-imperialist holdouts. Large corporations’ alliance with the state has enabled the two to control natural resources and all manner of other markets. Consumers thus have fewer choices and higher prices than in a market freed from regulation. But freedom is always preferable to laws and regulations imposed by the state. Freedom allows economies and the arts to flourish. It means scientific advances and technological innovation. And it forces responsibility on those able to handle it while still allowing for us to help each other.

The solution to the control of markets by cartels is to free them. That would make customers the true regulators. If they decry a firm’s practices, they can stop buying from it and start buying from its competitor. If you abhor business, you are free to start and join one of the thousands of cooperatives in the world or simply produce and give to your neighbours. But demanding more regulation to prevent big-business malfeasance is akin to shooting oneself in the head to cure one’s headache.

The Rule of Freedom is published!

October 31, 2012 2 comments

The Rule of Freedom: The Manifesto of the Sovereign Community (the book) is now available as an ebook from Amazon here.

The book discusses all the subjects dealt with on this blog but in greater detail, with more examples and full references. Any feedback you have please write on this post or on the book’s Facebook page here. Enjoy!

The causes of the mortgage crisis

October 16, 2012 5 comments

I have written elsewhere (here and in chapter 30 of my upcoming book) on this subject but here is a post committed solely to dispelling the myth “the free market” caused the crash of financial markets in 2008. I hear the lies repeated every day, even by my political economy professor: the reason the banks made such risky bets was there was no regulation and no oversight of the sector. The truth is, regulation was rampant.

Let us start with the Federal Reserve. The Fed is hardly ever mentioned as a cause of the crisis. Artificially-low interest rates (1%) encouraged artificially-high risk taking for certain sectors, including construction and lending to people who could not afford to buy homes. Fed policy increased the supply of money (look out for inflation) with the result that more dollars were created between 2000 and 2007 than had been created in the rest of the history of the United States. (It has done so again in the years since.) House prices rose.

They rose the most in California, where various laws made it impossible to develop the land, creating artificial scarcity and driving up home prices. But they rose in other localities too, in most cases because of similar restrictive building laws. 90% of the land in Nevada is owned by the federal government, so instead of a free market, the availability of land for building depends on the government’s approval of each use of it. Less than 10% of the land in the US is actually developed, but under the guise of preserving nature (a handout to environmentalists), the government protected land near residential areas and thus raised the price of it. As a result, many places saw a housing boom artificially brought on by government, whereas other places saw no boom at all. Thomas Sowell explains.

A fundamental misconception of the housing market existed both during the boom and after the bust. That misconception was that the free market failed to produce affordable housing, and that government intervention was therefore necessary in order to enable ordinary people to find a place to live that was within their means. Yet, the hard evidence points in the opposite direction. It has been precisely where there was massive government intervention, in the form of severe building restrictions, that housing prices skyrocketed. Where the market was more or less left alone, places like Houston and Dallas, for example, housing prices took a smaller share of family income than in the past. (The Housing Boom and Bust, 24)

The booms that did result, however, were, like many local problems, misperceived by an officious federal government as a national problem, requiring national-level intervention.

Easy access to housing began under the Clinton administration. Fannie Mae and Freddie Mac, government-backed but publicly-traded corporations that would be bailed out if necessary (a formula for moral hazard if ever there was one) also pushed to expand mortgage loans to people with bad credit under Bill Clinton. Bill Clinton’s Secretary of Housing and Urban Development, Andrew Cuomo

made a series of decisions between 1997 and 2001 that gave birth to the country’s current crisis…. He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded ‘kickbacks’ to brokers that have fueled the sale of overpriced and unsupportable loans. Three to four million families are now facing foreclosure, and Cuomo is one of the reasons why.

(Here are three more people to blame, in case you are interested.)

Democratic Congresspeople were reluctant to demand any oversight of Fannie, a campaign contributor. Fannie and Freddie guaranteed loans to people who were bad credit risks. These government-sponsored enterprises held about $5 trillion in mortgages. The Fed lent money to the banks at near 0% interest because, well, it could create money without hurting the people making the decision to do so.

At least as important regarding the subprime mortgage meltdown is the fact that owning homes had become the political cause du jour. Not everyone has to own a house to live; but if people are given houses, whether or not they can afford the mortgages, they might vote for the people who made it possible. The desire to introduce coercion into a market is always for the benefit of the coercer. Sometimes it benefits the constituent, and sometimes it leads to one of the most costly financial crashes in history. The Community Reinvestment Act (CRA) was meant to eliminate racial inequality in availability of credit. If banks did not lend to minorities in high enough numbers to satisfy the authorities, they could be crushed by lawsuits. (Remember, poor people were already being stung by local land use restrictions that raised housing prices. The CRA would enable them to get credit for something they might have been able to afford in a free market.) Instead of leaving interest rates to the market, politicians found it politically expedient to help minorities buy homes. It makes sense: if one can finally buy a home, one’s standard of living appears to have risen, and rising living standards get politicians reelected. Lending standards loosened.

Bear Stearns said the mortgages were sound. The three rating agencies (a state-protected oligopoly), you remember, the ones that said the mortgage-backed securities were great when they were garbage, served to reinforce the popular lending-to-everyone policies. Tax codes encouraged overinvestment in housing. To blame lack of government oversight for the crash is to get things backwards. The banks did what the government wanted them to do: hand out more and riskier loans. Those who talk of deregulation as a cause of the crisis fail to point to a single episode of deregulation, aside from the repeal of one clause of the Glass-Steagal act, which did nothing to enable banks to make bad loans. To say the banking sector was deregulated is to ignore or misunderstand the many regulations in place that helped cause the crisis.

One study finds that federal outlays for banking regulation—the laws big banks supposedly fear so much—increased from $190m in 1960 to $1.9b in 2000 and $2.3b in 2008. The US has 115 regulatory agencies. Funding to the Securities and Exchange Commission under George W. increased sizeably, with the result that its staff increased by one quarter. The number of rules businesses needed to follow rose. There may be an ideal regulatory agency or system, but it has nothing to do with what what the agencies actually do. These ones did what the politicians wanted: encouraged banks to make home loans to people who could not afford them, and solved a problem that did not exist, namely a nationwide lack of affordable housing. The result was disaster. Either government cannot be trusted to oversee corporations because it has been corrupted by them, or else it cannot be trusted because it is so incompetent. Either the fox is guarding the henhouse or the headless rooster is. More layers of regulations added to the existing system are not likely to help the public.

Moreover, it may be a mistake to call the crash a failure of regulation. Again, the corporations did what the government told them to, and people responded to incentives that monetary and lending policies created. Whenever we consider a policy a failure, we need to question whether it is indeed a failure or whether the goals and eventual outcomes went just as planned. After all, the crisis has ended up further enriching the rich, through bailouts and stimulus.

The securities and investment industry contributed $53m to congressional and presidential campaigns in 2008. (They have not slowed down since then.) Then, they stood back with their hands out and received more than a trillion dollars for their generosity. The bailout bill was defeated at first, but legislators, in their inimitable way, searched for a new way to pass the bill. They got more Congresspeople on board by sprinkling horsetraded favours in with the bailout money. (Something similar happened when Ronald Reagan bailed out big banks in 1983.) Special interests got what they wanted, legislators got what they wanted—win-win!

The argument the government made at the time was that these firms were “too big to fail”. In other words, their failure would mean the collapse of many more firms and the economy itself; therefore, they might need to be rescued. But the fate of Lehman Brothers, with more than $600b in assets, is instructive. It seemed too big to fail; yet, when it did fail, its assets that were worth preserving were bought by other firms. Keeping firms on life support discourages investment, encourages wild risk taking and drains money from those firms who are, in fact, productive and allocates it to those who have proven they are not. Promising to bail out failed firms created the moral hazard that enabled this crash.

Along came a large (more than 400-page) bailout bill, which anyone who opposed or even wanted to debate would be labeled as wanting the economy to fail. The government now owned hundreds of billions in bad debt, which meant instead of letting the companies pay for their own foolish bets, the taxpayers would. The case of the 2008 crisis and the recession was one of socialism for the rich. And democrats, who think that they have choices, were presented with two presidential candidates who agreed on the bailout and stimulus bills.

I am not an economist, but I do recommend the book Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse by Thomas E. Woods. Obviously, one book is not definitive, and all books I have read on this subject make good points. This one cogently argues the government’s role in the debacle was enormous. Its author is from the Austrian school of economics. The Austrian school predicted the crash (not to mention those of 1929 and 2000) based on evidence and basic economic principles. Either way, it is obvious that “the free market” and lack of regulation did not exist to cause this crisis. It was caused by the alliance of big business and big government, of a political system that rewards liars and thieves.

Many people, Occupy Wall Street protesters most vocally, blame the corporations for the crash. But corporations were doing what the government told them to. They blame corporations for accepting the bailout money. But if someone had trillions of dollars to give you, would you say no? That money only existed because it had been stolen from taxpayers in the first place.

And though some people—those who watch the news—think things are getting better, they are not. There will be no economic recovery, as the ruling class has already stolen it.