Capitalism had flourished for more than half a century since the end of Second World War while socialism had almost failed completely. At the time of one of the worst economic recession, socialism, unexpectedly, is gaining tremendous supports. Sarkozy had led an aggressive government interference into to the market economy, then the rest of Europe had followed. Within a couple of month, the whole global market has been nationalized, well, in a most willing way. Governments claimed they have well spent taxpayers’ money, or simply they didn’t have any other choice.
"An open, competitive, and liberalized financial market can effectively allocate scarce resources in a manner that promotes stability and prosperity far better than governmental intervention."
– Henry Paulson 18 month ago
"I’ve realized how flawed it is and how imperfect, but how necessary it is,"
– Henry Paulson 5 days back
The U.S. Treasury Henry Paulson said the first line when he wanted to push market economy in China; the second was during his interview with Washington Post. Paulson is a rather curious case. Before he assumed the power in the government, he was prominent advocate of market economy, which served him gloriously during his tenure as the captain in Goldman Sachs (Goldman Sachs had indeed produced a considerable number of high ranking governmental officials). The person who was almost as powerful as Fed Chairman, and who loved free market as passionately as Alan Greenspan, and whose every single word would change the course of all major stock market, says he wants more regulation. His word carries weight.
Paulson’s statement pitifully revealed one of the paradoxes of reality. We know pretty well both how bad it is and how inseparable it is. Many time, human had to choose the less evil solution. But what did the minority do wrong, that they have to sacrifice their righteous rights? People who supported free trade were as good as or as wrong as those who against it. They both had their arguments to help the economy. The paradox is that we have to turn down one of them. And what made worse were those politicians who intentionally stirred up the difference to benefit themselves. The situation would be polarized so far that no compromise is conceivable.
Paulson must have realized that the economy is so complex that no one seemed to have comprehended it fully. So rather than waiting for surprises from the self-regulated market, regulators prefer to have a better control. But can we really do that? Is that a real solution to the problem, or is it just a pain killer that simply (merrily?) postpones the problem? After centuries of development, the market is well educated and equipped to make its own risk-return check. It would have been a good lesson for the market. That was exactly the beauty of democracy. People might be wrong at times; but that is the only way people learn. By taking the responsibility from market players, the regulators will only breed more ingenious, more complex and bigger problem in the future.