Change of Heart

Where have all the free market enthusiasts gone?

Time was, you couldn’t watch an American business satellite TV channel without some advocate of the invisible hand celebrating the free market that regulated much more efficiently that any government-appointed overseer.

The doctrine of creative destruction, where the failure of bad firms and the success of well-run companies led to an ever-improving economy, was praised for its clinical ruthlessness.

Above all, government was bad. Government should be kept as small as possible, people should be taxed less and decide how to spend their own money, and the business of business should be left to business.

Then the financial smoke and mirrors in the American mortgage securitisation market fizzled away, and people got nervous.

Then Northern Rock became a household name, and a shiver ran down the spines of financial regulators everywhere.

Then there was Fannie Mae and Freddy Mac. And Lehman Brothers. Then the US government bought four fifths of AIG for $80 billion.

That’s billion. With a B.

I can see why parties with left-leaning philosophies might be in favour of this.

But the likes of the Republican party?

Whatever happened to their belief in creative destruction?