Liberal Vision

GUEST POST: The Era of Laissez-Faire?

One of the established memes about the financial crisis is that it demonstrates the failure of unfettered capitalism, the dog-eat-dog, laissez-faire environment that prevailed in the West over the last few decades, all driven by the ideology of “free-market fundamentalism.” This seems to be a truism among most of the Commentariat. Of course, as pointed out repeatedly on this blog, the truth is virtually the opposite: there was never any “deregulation,” the Bush Administration spent public money like a drunken sailor, and government continued to expand as it always does. But a picture is worth a thousand words, so try these on for size. (US data; click charts for sources.)

One response I sometimes hear is “Sure, there are more regulations and more government spending, but the set of things that should be regulated and the amount of government spending the economy needs are growing even faster!” This is essentially the Krugman-DeLong view about the stimulus: it just wasn’t big enough. Or they say that financial markets were “deregulated,” de facto, because the number of regulations and regulators increased more slowly than the number of new financial instruments and new markets. I wonder, though: are these falsifiable propositions? No matter how big the government is, if there are any problems, it’s always because the government isn’t big enough!

This post is authored by Peter G. Klein, an Associate Professor at the University of Missouri and Adjunct Professor at the Norwegian School of Economics and Business Administration. He usually blogs at Organizations and Markets, where this post first appeared.

GUEST POST: Dominique Lazanski – Not so Flash Gordon drives digital disaster

In this age of stimulus packages and needless intervention it has become fashionable again to incorrectly look to the government to solve problems.  Such is the result of the Digital Britain report, released yesterday.  Filled with more regulation, increased state monitoring, and additional taxation on phone lines, Digital Britain is a convenient way to increase government control in an increasingly over-taxed and over-regulated economy.

As stated in its press release, the main goal of the Digital Britain report is for “Britain to sustain its position and grow as a leading digital economy and society.”  This may seem a reasonable goal for a wealthy nation, but cannot be achieved through subsidies.  In America, the internet boom and the subsequent rise of the digital economy happened as a result of privately competing telecom, website, and media production companies.  Internet broadband was laid down not with government money, but with private investment leading the way.   As a result the US is the leading digital economy in the world, while reports have shown that the UK is at least 18 months to 2 years behind the US in its broadband and internet technology.  No amount of government money will lessen that gap created by freely competing companies with an incentive to make a faster, cheaper, or better product.

People should refuse to pay a state surcharge on phone lines and refuse to pay a state department for permission to view televisual media.  Why should we support a failing government who wants to expand their own reach and political gain with futile promises to make the UK a better digital society?  It makes no sense when other countries grow their economies through private competition.  We all expect the imminent electoral demise of Brown’s Labour Party – let’s hope their plans to intervene in the digital market go the same way.

Dominique Lazanski is a digital strategist with ten years experience in silicon valley. She now lives in the UK and is not affiliated to any political party.