Capitalists are like children and free marketers are like their parents.
If the free marketers neglect their duties to feed, protect, teach, and discipline capitalists, some well-meaning but inept government agency will impose itself into the parenting role, destroying the lives of everyone involved and wasting trillions of tax dollars (borrowed from future generations) in the process.
I lost sleep and ignored my favorite sports for four days engrossed in The Big Short. Almost every page revealed a cringe-worthy moment when free marketers like myself failed to reign in our capitalist brothers and sister. Our knee-jerk opposition to government meddling in markets led us, over the last 30 years, to defend or ignore rampant stupidity and occasional blind greed among big business people and financiers. The Big Short exposes the stupidity we should have protested.
Instead, just a handful of brilliant folks like analyst Meredith Whitney, neurologist Michael Burry, lawyer-turned-analyst Steve Eisman, and Wall Street bond trader Greg Lippmann recognized the massive Ponzi scheme that produced trillions of dollars in bad loans that would never be repaid. When the adults ignored their warnings, these human truth-detectors decided to beat the Ponzis at their own game: they shorted the entire financial system. And won.
Michael Lewis’s book is required reading for anyone who lives in our monetary system, anyone who votes, anyone who uses money as a medium of exchange. But its lesson for us on the right side of politics is critical: we must police ourselves or someone else will do it for us. The reason capitalism has a bad name right now is our fault as much as the fault of Marxist college professors and socialist Senators from Vermont.
The 2008 financial meltdown proved that Big Business, Big Finance, and Big Government work mostly to enrich themselves. We have to look out for our own interests and the interests of our fellows who don’t pay attention. We can’t outsource to government our duties to police big institutions.
And it isn’t over. Nothing’s been fixed. As Lewis points out in The Big Short:
The CEOs of every major Wall Street firm were also on the wrong end of the gamble. All of them, without exception, either ran their public corporations into bankruptcy or were saved from bankruptcy by the United States government. They all got rich, too.
The good news is: there are more of us than there are of them. Even better, we produce the wealth they thirst to consume for themselves.
We have the power. We just need to use it. And start by reading The Big Short.