Monday, March 7, 2011

McQuaig Skewers Right Wing Economic "Theory"

Here are some good bits from an article by Linda McQuaig in the Toronto Star:
Common sense tells us it’s wrong that hedge fund manager John Paulson made $3.7 billion in 2007, while a typical nurse earned about $45,000.

Paulson made his billions by betting against the subprime mortgage market, helping trigger the 2008 financial collapse. In what moral universe is he worth as much as a single nurse — let alone 82,000 nurses?

Our tolerance for this sort of absurd discrepancy illustrates our abject submission to the dictates of modern economic doctrine. According to this economic dogma, Paulson’s income — just like the income of a nurse — is determined by natural market forces, and any attempt to adjust incomes amounts to meddlesome interference in the free workings of the marketplace.


But, in fact, there’s nothing natural or innate about the marketplace. The so-called “free market” is nothing more than a set of laws devised by humans.

Change the laws, and you end up distributing income very differently.

Hedge fund managers, for instance, have been able to score fabulous jackpots in recent years because of the particular laws that govern banking and finance. Under the very different set of laws that governed banking and finance 30 years ago, such massive windfalls weren’t possible. (And yet the overall economy did well back then; indeed, it did much better than today.)
Read the whole article. She goes on to point out that pay equity for women is stalled for the same reason as the bloated pay packets for social parasites like John Paulson: laws are set up in a way that encourage the discrimination. If you really want to fix the problem, you need to change the laws.

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