Saturday, December 22, 2007

Government solutions are the answer to problems created by free markets

Rethinking belief in the perfection of free markets
America’s wealthiest colleges have endowments that are thousands of times greater than those at the least fortunate schools. The chasm is far deeper than that in other realms. After all, overpaid chief executives and investment bankers pay inheritance and income tax, so their wealth diminishes over time. Heavily endowed colleges and universities, however, suffer no such setbacks...
The investment income from Harvard’s endowment in the last academic year was reported to be nearly $7 billion — a 23 percent gain from the year before. At even the current low tax rates it wouldn’t hurt Harvard to give up $1 billion or so of its gains in order to make the sharing of our intellectual wealth fairer. Other colleges could make such a donation similarly unscathed.
I know it won’t be easy to convince well-off schools to share their wealth. But they should. They should see this act as part of a down payment on their professed mission: to create a stronger, smarter and ultimately more stable society. Herbert A. Allen is the president of an investment firm.
Editorial Decongesting the Skies NYT: December 21, 2007 The Bush administration’s remedy for the nation’s overcrowded skies, months in the making, correctly zeros in on the New York area where steady and sometimes monumental delays have created flying misery across the nation...The main feature of the plan, to take effect in March, involves flight caps at Kennedy International Airport — just more than 80 flights an hour at peak times, versus a load that reached 105 flights last summer.
The government should also consider expanding the use of military air lanes beyond holidays. For now, the administration deserves credit for not ignoring summer’s disastrous delays, for opening debate on a tough issue and for recognizing uncharacteristically that government solutions were the answer to a problem created by free markets.
Blindly Into the Bubble By PAUL KRUGMAN NYT: December 21, 2007 So where were the regulators as one of the greatest financial disasters since the Great Depression unfolded? They were blinded by ideology.
“Fed shrugged as subprime crisis spread,” was the headline on a New York Times report on the failure of regulators to regulate. This may have been a discreet dig at Mr. Greenspan’s history as a disciple of Ayn Rand, the high priestess of unfettered capitalism known for her novel “Atlas Shrugged.”
In a 1963 essay for Ms. Rand’s newsletter, Mr. Greenspan dismissed as a “collectivist” myth the idea that businessmen, left to their own devices, “would attempt to sell unsafe food and drugs, fraudulent securities, and shoddy buildings.” On the contrary, he declared, “it is in the self-interest of every businessman to have a reputation for honest dealings and a quality product.” ...
But Mr. Greenspan wasn’t the only top official who put ideology above public protection... Of course, now that it has all gone bad, people with ties to the financial industry are rethinking their belief in the perfection of free markets.
Editorial Arrogance and Warming NYT: December 21, 2007 The Bush administration’s decision to deny California permission to regulate and reduce global warming emissions from cars and trucks is an indefensible act of executive arrogance that can only be explained as the product of ideological blindness and as a political payoff to the automobile industry...
One of Mr. Johnson’s arguments was that a “national solution” to carbon dioxide emissions was preferable to a “confusing patchwork of state rules.” A national solution is precisely what the administration has refused to offer. And the California rule — once in force there and in 17 other states — would in fact constitute a uniform standard covering nearly half the car market. That is why the automakers lobbied so fiercely against it. It has been hard enough to trust Mr. Bush’s recent assertions that he has finally gotten religion on climate change. It all seems like posturing now.

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