by Jon Guze
Senior Fellow, Legal Studies, John Locke Foundation
On Monday, the Wall Street Journal ran an opinion piece by Romain Hatchuel (managing partner of New York-based asset-management firm Square Advisors LLC) entitled “The World-Wide Undermining of Free Markets,” in which the author makes some provodative suggestions:
More people need to question the antiausterity camp’s real motives, which clearly stem from a distrust of markets. This is especially obvious when their attacks on fiscal discipline ignore the progress made by countries where austerity measures have been successfully implemented, such as the United Kingdom, Ireland or Portugal.
Do these fiscal doves care that much about unemployed Spaniards or Greek pensioners? Perhaps, but their ultimate goal, it seems, is to ensure that extraordinary postcrisis measures become permanent policy. Those who oppose this merely want a gradual return to normal fiscal and monetary policies. Austerity is just another word for free market, and the harsh debate around it is actually about whether the economy should operate freely again, or continue to drift toward a state-driven model….
Unprecedented monetary easing, high public spending, repressive regulation and automatic debt forgiveness, while arguably useful in the midst of a severe crisis, cannot be sustainable remedies in the long term—that is unless one believes the world should do away with free-market principles altogether. Those who continue to advocate such measures, more than seven years after the global financial crisis blew up, should at least admit that what they really want is a profound and permanent change in the system.
Maybe they know something I don’t, but it is fair to ask whether these extreme interventionist policies have become part of the problem rather than the solution, and if we shouldn’t instead revert to what remains the most successful economic system ever tried—the free market.
As far as the U.S. and its slow but steady drift away from market fundamentals is concerned, the Federal Reserve’s future interest-rate decisions and the coming presidential election will provide important clues as to where the nation, and its still unsteady economy, is headed.