Wednesday, 5 November 2014
Advocates of free markets hate free markets.
It’s widely recognised that the bankster – criminals who loudly proclaim the merits of free markets, and loudly deplore socialism, devote much of their energy to promoting socialism (socialism for the rich, that is). I’ll refer to these self-contradicting “anti free market free marketeers” as AFMFMs.
But there’s another large and powerful group of AFMFMers: that’s the people who claim to deplore state subsidies and backing for banks, but who in the same breath object to removal of those subsidies. The majority of politicians and members of the general public make the latter self-contradiction.
As the Vickers commission rightly said, “The risks inevitably associated with banking have to sit somewhere, and it should not be with taxpayers”.
So all forms of state support for banks should be removed, including lender of last resort. But that turns depositors into shareholders, or at least shareholders of a sort: that is people who stand to lose out when things go badly wrong at a bank.
But the latter “turns depositors into shareholders” problem is easily solved by having the state provide any money that is needed, while counting anyone who funds a commercial bank as a shareholder. Indeed, in the UK the state already does that in that National Savings and Investments provides that service.
But the latter AFMFMers don’t like that. The change is too much for them. They’d rather cling to the existing system which involves them in deploring subsidies for banks at the same time as effectively backing state subsidies for banks.
But big changes are always difficult to bring about. It wasn’t easy to abolish slavery.