This article is part of The Rules, a forum on governments proper role in the market.
Every day we read the headlines, feel the tensions, observe the consequences of the recent failures of market and government. Having a serious conversation about how to remedy these failures lies at the heart of current American politics. And that conversation should address three distinct questions:
• What are the parameters of government intervention in the marketplace? What rules should we use in deciding when the government should act, and when it should let the market take its course?
• Has our response to the immediate crisis been successful?
• How might we restore an effective structure for corporate governance? The failures of corporate governance account for much of our economic troubles over the past 30 years. Getting out of the current mess will require addressing these underlying failures.
Ideas about government intervention have changed quickly. Ayn Rand was an articulate, powerful voice for libertarianism, the notion that each of us individually deserves to own what he or she creates, and that the role of government must be minimized. For 30 years a libertarian ideology dominated leadership circles, beginning politically with President Reagan, who led a fundamental transformation in our political discourseabout the governments role in everything from marginal tax rates to regulation. Many people think that Reagan was brilliant, and that his policies were necessary. Whether or not you agree with that assessment, you have to acknowledge that the Reagan agenda dominated our discourse until the fall of 2008, when the entire economic world appeared to collapse.
This article has become a book!
MIT Press / Cloth / $14.95 / April 2010
With all the technocratic talk about credit default swaps and bailouts, Americans still have not come to terms with what we really need: a market that delivers public benefit. Spitzer lays out a map of when and how government should intervene to ensure that the market works for everyone.
With responses from Dean Baker and Robert Johnson.
Eliot Spitzer is former Governor and Attorney General of New York.