Sunday, October 28, 2012

Protection Racket

The Allocation of Social and Financial Risk

Cartoon: difference between socialism and capitalism
 ~ What they don't tell you about capitalism (as currently practiced):
Gore Vidal, the recently demised American writer, once famously quipped that the US economic system is "free enterprise for the poor and socialism for the rich".

Since the outbreak of the global financial crisis in 2008, not only has the US lived up to Vidal's caricature but the whole of the rich capitalist world has become more "American". The poor are increasingly exposed to market forces, with tougher conditions on the diminishing state protection they get, while the rich have unprecedented levels of protection from the state, with virtually no strings attached.
Vidal had it right, but it is more pernicious, since the rich don't just get to socialize their losses, they are actively protected from the corrective market forces that make capitalism theoretically efficient. As one wag put it:
Free-market capitalism is for the poor. Job creators prefer market-free capitalism.

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