The author displays a failure to understand the economics he is purporting to criticise.

There is no divide between ethical values, and ‘economic’ values. Human action in general, and economic behaviour in particular, always consists of an individual person preferring A to B. When people do so, they choose on the basis of *all* their subjective values, both those which can be expressed in a money price, *and those that can’t*.

Force and fraud are illegal in market transactions. To the extent that *market* transactions produce results the author doesn’t like, it is not because they have excluded ethics. It is because the author doesn’t agree with other people’s valuations.

Force and fraud are only legal for governments. Their entire revenue relies on the use of aggressive force and threats. And politicians in making promises that people rely on, are not bound by the laws against fraud.

Yet the author fails to distinguish between outcomes that are the result of market decisions, and those that are the result of government decisions. He simply assumes that anything he doesn’t like is because of human freedom. Therefore his ethics are as incoherent as his economics.

The author is conflicted over whether it is desirable for people to enjoy material wealth or not. On the one hand, he decries the existence of poverty. On the other hand, he criticises the process that has alleviated poverty and increased wealth more, for more people, than ever before. Well, which is it? Make up your mind!

If we were equal, people would obtain no material benefit from human society. One could get what one wants without resorting to social co-operation. What gives rise to the wealth that the author would like to be more equally distributed, is the fact that people are driven by their *unequal* valuations of the same thing, to engage in exchange transactions that are mutually beneficial.

The theory of Karl Marx, that capitalism makes the mass of people poorer, lives on in woolly thinking, despite the fact that both theory and practice have disproved it over and over and over again.

Ray Cleary makes a sound and considered point, hardly warranting the defensive response from Wing Ah Ling and the patronising suggestion that Ray "displays a failure to understand the economics he is purporting to criticise." I hope that the article elicits some more considered responses from economists who do not suffer from the illusion of perfect markets and are prepared to learn from this global threat. Whether it is correct to claim, as Ray Cleary does, that "the current global crisis is, at its core, an ethical and moral issue, and then an economic one" may be debated, but it would seem unarguable in my view that the adverse impacts of the crisis, particularly on the more vulnerable members of society, demand serious analysis and consideration of a more effective role for government regulation.
Peter Johnstone, 1105, Tuesday 160609

PJJ’s post comprises misrepresentation and circular argument.

No-one is asserting perfect markets.

Serious analysis and consideration of a more effective role for government regulation is a great idea, as long as you don’t assume that it must take the form of more, rather than less government regulation. However if you do assume that, then it is you who is making the assumption of perfection – perfect government.

No-one asserting the need of more government regulation will venture to explain how government gets this wished-for economic super-competence. But perhaps you can, PJJ?

What is it about the fact of majority opinion, or being able to use force, that enables the government to know the difference between what each of billions of market values *is *,and what it should *be*?

And if government does have such a superhuman knowledge, wisdom and capacity, then isn’t it true that we would be better off if human freedom were abolished, and substituted with such coercive central planning? Answer?

The problem with the assumption that the current crisis originates in not enough government regulation, rather than not enough market regulation of activity, is that it assumes that governments’ chronic policy of inflating the money supply has no economic effect, no effect on debt levels, no effect on bad loans, no effect on prices, no effect as to ‘bubbles’, no tendency to promote malinvestment, can continue indefinitely, and has nothing to do with the resulting collapse.

The moral vanity of the anti-capitalists is in their conception that they represent the greater good for the poor and disadvantaged.

In fact the main arguments against the ideology of government ‘economic management’ is precisely that such well-intended interventions are based on economic fallacies and turn out *necessarily worse* for the vulnerable members of society, whose interests are better served by economic and political freedom, than coercion and central planning based on long-disproved economic fallacies.

There is no question of “returning” to anything. We are still living in the same conditions we were before the global economic ‘crisis” – a ‘crisis’ affecting only those, like the author, who do not understand the free market system.

The system is about ups and downs; bumps and thumps. The “conditions” referred to are the silly actions of a few lenders handing out cheap money to people who could never afford to repay it. There is nothing wrong with the system. All alternatives to the free-market system have most of the people dirt poor all of the time.

Enlisting the ramblings of the unworldly and Left-wing Archbishop of Canterbury shows that Mr. Clearly doesn’t know what he is talking about. If he did, he wouldn’t write such nonsense about the system which helps his Anglicare organization greatly.

Wing Ah Ling continues to resort to a simplistic argument against regulation of the market. He resorts to the misrepresentation and circular argument of which he accuses others.

Wing Ah Ling asserts that government regulation must take the form of less, rather than more regulation. He thus seems to accept a place for government regulation while assuming that there is no room for more government regulation. Yet he claims to accept that serious analysis and consideration of a more effective role for government regulation is "a great idea". Personally, I'd like to see the result of the serious analysis before adopting a position on whether the present level of regulation is excessive. Perhaps we need better targeted regulation that is less interventionist but more effective in addressing the issues raised by Ray Cleary.

I am surprised at the imputations that a) I am anti-capitalist, and b) I believe in perfect government. In fact, I strongly support the importance of an effective market place and am as sceptical of the performance of governments as I am distrusting of a market place without any regulation. But we do and should hold our governments accountable for an appropriate level of oversight of the behaviour of the marketplace.

Wing Ah Ling gets to his point in the final line or two where he admits to the view that the interests of the vulnerable members of society are better served by "economic and political freedom", than by what he refers to as "coercion and central planning based on long-disproved economic fallacies". Not bad in a discussion about the global economic crisis!

I reiterate my own final line or two: "it would seem unarguable in my view that the adverse impacts of the crisis, particularly on the more vulnerable members of society, demand serious analysis and consideration of a more effective role for government regulation." Seems a fairly conservative and responsible approach?

Peter Johnstone

Ray Cleary's article is full of good intentions but in the end I found it empty. The problem started with poor American supervision of their own banking and finance system, about which Australians can do little. As for returning to anything, Leigh is right in that we never left.
To change, first we'd have to have a clear idea about what we wanted to change into and some idea of how that change might occur. Cleary does not put forward anything that might be described as an agenda, just a declaration of good intentions.
But is there any need for change? The beauty of our system is that everyone can choose their own path. If they want to be moral and join organisations like Anglicare then they can do so. If they want to chase dollars then they can go into sales, or the stock market where they must obey regulations that are, we hope, properly enforced.
Open markets boom and bust - its what they do - we have had a bust that was not Australia's fault, so lets think carefully before we try to fix something that is not broken.