David Stockman, director of the Office of Management and Budget under Reagan and a former Congressman puts it bluntly “I believe we no longer have free market capitalism and we no longer have a democracy.” What we have instead is “crony capitalism” — a system that is rigged in favor of the financial elite, and which will “generate results the market wouldn’t otherwise provide for”.
The whole point of free-market capitalism is that it is supposed to reward the best and the brightest, encourage innovation and keep businesses competitive. Without competition, what you have is socialism (or worse, National Socialism). When conservatives attack socialism, they are actually attacking socialism for the poor, but socialism for the rich is even worse because the rich control our economy. When failure is met with bailouts and flabby industries are kept alive with corporate welfare, our entire economy is in jeopardy.
According to Stockman, the main culprit is The Fed. “The Fed is the great enabler.” Allowing banks to borrow money at no cost for so long turns “capital markets into a rip-roaring casino that really is not productive for the real main street economy and is generating windfall gains for a very limited number of people for no good purpose.”
How do we we solve this problem? Simple, go back to free markets. No more bank bailouts, no more subsidies for dinosaur industries (I’m looking at you, oil!), and regulate banks so that all investors have an equal opportunity to make money, not just insiders. And raise taxes.