Network News

X My Profile
View More Activity
2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

Rivlin: Capitalism Is Like a 'Machine Gun, Nuke Reactor'

A hearing before Rep. Barney Frank's (D-Mass.) House Financial Services committee is underway and it will be a start to what could be massive overhauling of government regulation of the crashing financial services sector. (See: Bear Stearns, Lehman Bros., etc. etc.)

Already, the "s-word," or "socialism," is floating around the room. For conservatives, more regulation means a slippery slope to socialism. For some liberals, well, that might not be so bad.

Witness Alice Rivlin, former director of the Congressional Budget Office (and a former director of The Washington Post Co.), just said: "Hardly anyone thinks we would be permanently better off if the government owned and operated financial institutions and decided how to allocate capital. But market capitalism is a dangerous tool. Like a machine gun or chainsaw or a nuclear reactor, it has to be inspected frequently to see that it is working properly and used with caution according to carefully thought out rules."

Here's a copy of her testimony.

Rep. Spencer Bachus (R-Ala.) is giving a stern lecture on "living responsibly," saying that Americans have been encouraged to spend, spend, spend when they should been encouraged to save, save, save.

"How do we encourage people to save? How do we encourage people to live within their means? How do we encourage governments to live within their means?" Bachus asked, perhaps rhetorically.

He continued, hammering on lenders who've given cut-rate loans to risky customers: "The best way to discourage people from making bad loans is to make them eat those loans," Bachus said.

-- Frank Ahrens

By Frank Ahrens  |  October 21, 2008; 10:50 AM ET
Categories:  The Ticker  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Govt. Hires Accounting Firms for Bailout
Next: Nobel Winner: Fed Has Performed 'Abysmally'

Comments

California went from Mare Island to Nightmare Economy.

“TORPEDOED” read the headline of the Vallejo Times Herald on the morning of June 26, 1993. This one word banner summed up the emotions of the citizens in this northern California city. The Base Realignment and Closure (BRAC) Commission had recommended to Congress and the President that the Mare Island Naval Shipyard be closed. For over 140 years “the Shipyard” had provided ships and trained the men to defend the nation. For as long as anyone could remember, the Shipyard had not only been the largest employer in Solano County, but was also the largest industrial plant in all of California. In July 1993, President Clinton accepted the BRAC Commission’s recommendation and after Congressional ratification the Shipyard was scheduled to close on April 1, 1995.

As the initial shock of the notification of closure wore off, the City began the planning process for the future reuse of this valuable economic development asset. The City’s initial cautious optimism has evolved into an overwhelming interest in the progress being experienced at the former Shipyard. Enthusiasm with what the future will bring and a desire to be part of the future of this economic success story is now the interest of Vallejo’s citizens.

Posted by: Anonymous | October 21, 2008 11:30 AM | Report abuse

Frank, I find it interesting and self serving that you did not include the first few sentences from Alice Rivlin's comments. You know, where she said "Market capitalism is far too powerful a tool for increasing human economic wellbeing to be given away because we used it carelessly. Besides, there is no viable alternative." The fact that she acknowledges the inherent dangers in market capitalism does not mean that she is advocating socialism. Anyone who refuses to acknowledge the dangers, given today's circumstances, lives in the dangerous world of denial.

Posted by: Debbie | October 22, 2008 4:54 PM | Report abuse

The comments to this entry are closed.

 
 
RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company