Scottish Enlightenment philosopher David Hume noted as long ago as 1741: "Avarice, or the desire of gain, is a universal passion which operates at all times, in all places and upon all persons." One cannot explain episodic phenomena such as financial crises with reference to a constant such as human nature or rationality.Well said that man.
The principal mistake the critics of free markets make is to assume that self-interest, greed and irrationality affect only private sector decision-makers. Politicians and regulators are just as prone to self-interested behaviour and do not become saints by virtue of elected or unelected office. The public sector and regulators are populated by the same species that is found in the private sector and financial markets. We should always be suspicious of claims to superior moral virtue coming from politicians.
Thursday, 30 October 2008
Beware political saviours
Economist Stephen Kirchner writing in The Australian tells us to Beware political saviours. He makes a nice point that I'm sure most public choice economists would also make,