Nobel Prize-winning economist Joseph Stiglitz seems to have forgotten that we don’t have free markets (yet).
The idea that markets are “self adjusting,” that free, unfettered markets lead as if by an invisible hand to the well being of all, has been repeatedly refuted (the Great Depression was the most telling refutation). But it is a lesson that has to be learnt over and over again.
The challenge is to get the right balance between markets and government, to get the right form of regulation that allows for innovation – but not the kind of financial innovation that we have just seen. Instruments that were supposed to reduce risk actually increased it.
When will they figure out that there can be no balance between force and freedom? Get the state out of the economy! I guess that is a lesson to be learnt over and over again, eh? ;)
