Free Market-Free Speech

Because of the turmoil in our markets it is appropriate to examine whether there is any connection between the free-market philosophy and the concept of free speech. We in the United States have a felt impression that democracy, free speech and free markets are all part of one integral concept. So we in the United States believe that ,for instance , free markets in China will inevitably lead to free speech and then democracy. If you have lived and worked abroad you will know that this is not true. An article by Professor Charles Wyplosz , a professor of economics at the Graduate Institute in Geneva Switzerland deals with these ideas.

The concept of free markets is an Anglo-American idea. It is not a concept that is subscribed to by virtually the rest of the industrialized world. As a matter of fact in the current crisis there is quite a backlash to this concept. The French president and the German chancellor and officials in India, China, Argentina are calling not only for the United States put its house in order. They feel that it is their right to do this because they have been financing our debt for a long time.Also because whatever happens in the United States affects the rest of the world, that in fact there should be rules regarding financial markets that apply to the entire world including the United States. There is a backlash in the delicate balance between individualism and solidarity. The USA is known for and practices individual responsibility. In many other countries this individualism is seen as selfishness and greed. The emphasis in other countries is instead on solidarity with your fellow citizen. Other industrialized countries for instance create incentives to support programs , like nationalized health care, even if they are inefficient.

The assertion that individualism delivers the common best, is not popular outside of the United States and Great Britain. These critics insist that that assertion is only approximately correct because it assumes that markets are perfect, which is never the case in practice. And where there are problems or catastrophes , like the one we are experiencing now,the free marketeer views this as a deviation from the ideal and seen as a regrettable side effect. The basic concept about the market, that it always allocates resources better was never true. The financial markets for instance suffer from very serious failures , chiefly, as Professor Wyplosz puts it, "information asymmetry". The professor is very kind. It is like saying that when someone lies he is being " economical with the truth." "Information Asymmetry " is exactly the same.

The Anglo-American market model has been perverted. We have championed arm's-length finance. This is the financing of corporations through the issuance of shares and bonds to anonymous stakeholders. But the basis on which that concept works is information. If there are no rules and regulations with consequences, operators in this marketplace are free to supply whatever information they please.You know, "caveat emptor", the "buyer beware." And if this information is misleading or false and there are dire consequences as mentioned above, this is viewed as an "unfortunate side effect" of an otherwise perfect system. And as we make our way through the " Information Asymmetry" contained in zillions of derivatives, collateralized instruments , futures contracts , short selling, etc. we must conjure up a situation where a person organized and presented these concepts to executives somewhere. It would be interesting to discover who was this person. Because in the presentation, what is obvious to all of us now, could not have escaped those "worthies" who made the decision to market these fatally flawed ideas. And then someone in a very high place had to explain this to the top financial figures in our government. This must be so since these instruments were not traded surreptitiously. And these originators obviously had access to our secretaries of treasury and federal reserve chairmen. And how did they have this access? And because these instruments were widely traded, our officials obviously listened with a sympathetic ear. One wonders how that happened? Do you think you would be anywhere near the answer if "you followed the money."