No Gain, No Pain

Eliot Spitzer (of all people) has published a very insightful analysis. It starts:

Although everybody claims to love the market, nobody really likes the rough-and-tumble of competition that produces the essential “creative destruction” of capitalism. At bottom, this abhorrence of competition and change are the common theme that binds together the near death of the American car industry, the collapse of the credit market, the implosion of the housing market, the SEC’s disastrous negligence, the Madoff Ponzi scheme, and the other economic catastrophes of recent months.

In 1776, Adam Smith pointed out that businesses hate competition and would happily have government keep competition at bay. And governments are often too happy to comply, with politicians using phrases like “keeping America safe” or “saving American jobs”. The results are usually the same: short term gains and long term pain.

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