Capitalism or crony capitalism?

As I argued previously, the Occupy protesters are justifiably angry, but to direct their anger at capitalism is a mistake, since it was not free markets that created this current finanicial crisis, but rather a system of crony capitalism and government interventions. The decision to bail out Wall Street firms is not free markets at work – the markets would punish the failed banks with losses and bankruptcy. Instead, governments around the world have rewarded them with (often newly printed) money.

Professor Chris Coyne succinctly explains:

It’s also worth remembering that the Obama campaign received massive donations from Wall Street firms, so it’s no great surprise that government interventions are to their benefit, at the cost to the general taxpayer. It’s also worth noting that the previous US Treasury Secretary, Henry Paulson (who served Bush) was the CEO of Goldman Sachs prior to taking office. Revolving door anyone?

As Hayek raps,

Oversight? The government’s long been in bed
With those Wall Street execs and the firms that they’ve bled
Capitalism’s about profit and loss
you bail out the losers there’s no end to the cost

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