The advantage of approaching this recession from a position of affluence is that we have much more of a buffer to cushion us from serious economic hardship. Had we followed the path of centralised planning we would be in the position that Russia was in the early 1990s, with a declining life expectancy and bodies in the streets, not merely having to give up our bottled water and gym memberships.

As for the government's competence to manage the economy:

"The Future Fund’s return for the quarter (ex Telstra) was minus 1.32% and for the financial year to date it was _minus 8.78%_"

March 2009 quarterly update: http://tinyurl.com/nsbagq

For the author to suggest ethics as the cure is overly simplistic, and makes it clear he has fallen for the lies of the likes of Rudd and Obama.

The fact is we haven't had anything like an "overtly capitalist" economy, and the crux of our current situation falls to successive very poor socialist, extremely interventionist governments.

Sure, greed played a part, but all men are greedy, and it's the risk of loss that tempers greed. Governments the world over have removed the fear of that risk by guarantees on deposits, and bailouts, thus allowing greed to run wild since investors no longer bother to do their own due diligence, as the government is doing it for them.
More regulation or intervetnion based on ethics will do more harm than good.

Perhaps read some Peter Schiff (http://www.safehaven.com/archive-162.htm)to find out what's really going on Ray, rather than listening to the mainstream economic pundits, or self serving politicians.

Given he's predicted everything that's happened from the dot.com crash to the current real estate bubble, when the mainstream (Keynesian) economists & western governments were caught like a Deer in headlights, I'm inclined to listen to him over any of them, and their self serving socialist lies.

Governments only push socialism because it gives them more power over everyone else, and it's amazing how much of the population is willing to hand over personal freedom for the illusion of safety, or the promise that the government will steal from others and give to them for doing nothing. That's human greed at its' worst in my opinion.

PJJ
I am not assuming that government should necessarily have any role in ‘economic management’, so whether or not you agree with my argument, it is consistent, not circular.

* * *

I think it is a great idea to re-consider the role of government and market. However if the re-consideration starts with an assumption in favour of government, then obviously that will bias the conclusion.

The argument against government ‘economic management’, is that it makes society worse, especially for the disadvantaged. Yet when the predicted negative consequences materialise, government, and the author, simply blame the market. Presumably a nirvana of social justice and economic plenty lies somewhere between the level of government we have now, and total government control of everything. Reality check?

The starting point of an even-handed analysis would have to be an understanding of how people take action in peaceful social co-operation so as to produce and share more rather than less; the process by which people’s valuations give rise to exchanges and to society; the function of money, prices, and economic calculation; how people’s time preferences give rise to the phenomena of capital and interest; and how markets co-ordinate and harmonise the values of billions of people without knowing each other.

The second point would have to be an understanding that any political state includes a monopoly of the use of force. From this basis they then can and do legalise for themselves what are crimes for everyone else, including demanding money with menaces, armed robbery, forced labour, counterfeiting, fraud, forced indoctrination, murder, mass murder etc.

But all this is a blank on the map of those urging for greater governmental intervention. The author seems to suspect, as Marx argued, that the processes of peaceful social co-operation are essentially immoral, exploitative, and unjust, and should be forcibly overridden by the state for a more ‘just’ outcome.

On the other hand, if people are too dim or greedy to know what transactions to enter into, he does not begin to explain how the state – made up of these same people – is in any better position, especially since it will lack the advantage of economic calculation based on profit and loss, and have the ethical liability of a monopoly of violence and threats.

No interventionist will venture to answer the question: how and from where does the state get this assumed super-competence in ethics, in knowledge, and in capacity? Is the state a superhuman entity? A god?

What is it about the power to beat people into submission, or about majority opinion, that confers the supposed competence of the government to “balance” the market’s peaceful co-operation?

We know what reason there is to think a coercion-based monopoly will use its powers to privilege vested interests, sponsor political favourites, restrict production, confiscate earnings, exacerbate disadvantage, make war and aggrandise its own powers and income.

What reason is there to think it is capable of a “more effective” intervention in the first place? How is government going to know the difference between what the market price of millions of goods *is*, and what it *should be* in millions of people’s valuations changing daily?

As for government accountability, one (compulsory) vote every three years, between two parties each offering a similar ‘package deal’, both aspiring to run a monopoly government based on compulsory expropriations, is near worthless in practice.

I suggest we should be thinking instead how to introduce more and more opt-in policies, so that government is really factually subject to the consent of the governed, and people are not forced into sponsoring power arrangements and privileges that they disapprove of.

Wing Ah Ling, thank you for your extensive explanation, of which I refer only to your opening statement that you are “not assuming that government should necessarily have any role in ‘economic management’. I suspect that you don’t see any role at all for responsible democratic leadership. Now that you’ve clarified your position, I am no longer surprised that you are unable to see that the adverse impacts of the global economic crisis (particularly on the more vulnerable members of society) demand consideration of better means of government regulation.
Peter Johnstone 1450, 170609

PJJ
You are continuing to argue in circles - assuming what is in issue.

Your mission, ‘should you choose to accept it’, is to provide the answer on which your own presumption depends: How does majority opinion, or force, give rise to this mystic super-competence that the same people lack?