Scapegoats

I have never been as popular as I have been the past several weeks.  With the ever changing details of the current financial crisis, people who would previously have preferred moderate pain to a discussion of economics are now wanting to talk to me about what I think is happening.  I have no doubt that the events taking place and their impact on the future of politics and economic policy will be remembered as one of the most important periods of economic history since the Great Depression.  For those who are interested in investing a little bit of time learning about some of the causes and issues associated with the crisis, I recommend a panel discussion hosted by the School of Global Commerce and Management at Whitworth University.  The audio of this event can be found at  http://www.whitworth.edu/Podcast/08_09/SGCMPanel9_24_08.mp3

During times like these, there is desire to find someone to blame.  What concerns me deeply is the very real possibility that this experience will be used to stoke the ever present protectionist feelings found in the United States resulting in a backlash against trade and the free market.  It may be very difficult for our next president to stand against such a popular feeling that will likely be shared by Congress.  In our desire to find a scapegoat, we must remember that this crisis was encouraged by a number of government policies, including the political promotion of home ownership using Fannie Mae and Freddie Mac, and very cheap money from the Federal Reserve.  Even if you do decide that the free market in finance is the main culprit, don't generalize too much.  It would not necessarily follow that failures in finance imply a failure of markets in general.  

No matter what happens over the next year or two, we must remember and remind others that the reality is that free markets have eliminated more poverty and brought opportunity for a better life to more people over the past half-century than a centralized government ever has or ever could.  Free market capitalism is not perfect, but it is the best hope mankind has yet found for improving the material conditions of humanity and preserving liberty.