(A Populist Capitalist Blog) 

The current economic crisis is the result of a massive failure of morality and regulation, not a blanket indictment of capitalism per se.

Wall Street and the CEOs of the Fortune 500 sold Congress, regulators, analysts, and the general public a bill of goods containing several flawed concepts:

  • capitalism is self regulating
  • trust us, we know what we are doing, and
  • we are soooooo smart we deserve obscene compensation.

Capitalism is simply a method of harnessing and directing human motivation to produce the greatest prosperity, for the greatest number, for the longest period of time. Capitalism is like fire: directed and focused (in a fireplace, say) it can be beneficial. Let it run wild, you have forest fires and devastation.

Capitalism in its entirety is no more “self regulating” than fire is self regulating. Yes, certain sub-systems of capitalism have feedback loops and in that sense can self regulate. However, the painful extremes that can occur before equilibrium is re-established are undesirable, to say the least.

Just as an NFL game would quickly degenerate into a brawl if the referees walked off the field, so too did our economic system run amuck as capital requirements were loosened, other traditional restrictions were removed from the bank system, and regulators and Congress turned their backs.

Expect the Best, but Inspect for What you Expect.