Is Market Fundamentalism the Problem?

Over 20 years ago, Ronald Reagan repeatedly said: "Government is not the solution. Government is the problem." The acceptance of this idea has led to several rounds of tax cuts and cuts in social programs. The populace, having generally accepted the central idea that government was inefficient and ineffectual, elected politicians that voted to cut social programs and cut taxes because, the voting public was repeatedly told: "you can spend your money better than the government can."

Now we are starting to come full circle; the political pendulum is swinging back. Market Fundamentalism, as a progressive think tank called the Longview Institute calls it, is starting to be questioned. The Longview Institute provides a definition of Market Fundamentalism:

Market Fundamentalism is the exaggerated faith that when markets are left to operate on their own, they can solve all economic and social problems.

I suspect we are just now starting to see the pendulum swing back toward the idea that sometimes government provides the only effective solution. After the Jack Abramoff and Duke Cunningham scandals, the Enron and other major corporate bankruptcies, the attempt to privatize Social Security, our health care mess, the current housing bubble and the rising debt problems have led the public to question just how "efficient" the markets really are. Many of these problems are based on excessive greed by private business interests to outright financial fraud using government as the conduit to commit the crime. The public, I suspect, has become dissillusioned with the idea that the "market" will solve their problems. The public appears to now be starting to think: "the free markets are not the solution, they are the problem."

The problem right now is that our country is out of balance. We do not have laws strong enough to protect the working class against Enron-type dealings. Corporations can file bankruptcy and leave long-employed workers without pensions and health care. Wages for the working class are not keeping up with inflation; the executive's salaries are rising precipitously at the same time that their employees continuously face insolvency. Health care costs, along with excessive interest rates and fees on short-term and revolving debt, are leading to financial insolvency of the working class. Furthermore, lending institutions and their lobbyists were able to get the very bankruptcy laws they wanted -- without any debate or amendments -- into law and reduced their risk of loss like they say they needed. But did it lead to a reduction in interest rates and fees? Nope. Just the opposite. Interest rates and fees have continually risen even though the risk is less now.

This proves that laissez-faire economics just don't work. The lack of government regulation and interference has allowed excessive greed to ruin the market for those with less economic bargaining power. So, at this point in our history, government is not the problem; it is the solution.