Popular Delusions and Misleading Myths about Finance and Markets

Some damaging and deceitful propaganda.

1. The current financial meltdown was caused by government overspending.

   This pernicious piece of rubbish is still being vigorously promoted by some free-market think tanks and politicians in the US and Britain.
   The meltdown was caused by the investment banks, with the collusion of government and many politicians of both main parties in Britain and America. In countries which regulated their banks more tightly - Australia, Canada, Sweden, and Norway amongst others - the effects of the meltdown are far less than those suffered by Ireland, UK and USA.

2. Free markets make us all richer

   What we should have learned is that free markets are subject to fads, fancies, panics and rushes of irrational exuberance. Also, they are dreadfully exposed to manipulation and exploitation by the rich and powerful, who act to preserve and extend their power and wealth, to the impoverishment of the majority.
   Markets need strong regulation to make them useful to society.

3. Private enterprise is a better provider of social services than the public sector

   This is another piece of free-market rubbish. Those countries that have promoted private enterprise in the provision of social services, Britain and the US, both give the lie to this proposition. In the US, the dire state of public health by comparison with most European countries and the vast expense of private health provision, plus the fact that about 50 million people have no effective health provision should be evidence enough. Western European countries have state-led health services, the US a private sickness service for those who can afford it.
   See Transatlantic Perspectives, The Institute for Shallow Thinking, "Amazing American fantasies about the NHS refuted by experience"
   The experience of Public-Private "Partnerships" in Britain is a litany of rip-offs, overspending and shoddy work that will blight many parts of the public sector for decades. And the Con/Lib coalition seems to be creeping into wholesale privatisation by stealth.

4. "Markets" are an elemental force that can bring down nations

   In the media and amongst the political classes, the idea is promoted that "The Markets" must be pleased or financial ruin will follow.
   In reality the markets are investment bankers, money brokers and traders all trying desperately to make money by speculating on movements in the value of money, derivatives and government bonds. Most of these are employed by global investment banks and have enormous power because of the amount of money they can move around the world. They are supported by the Ratings Agencies - they value the prospects of currencies and economies. It is these agencies that so grossly and disastrously misread the impending banking crash that it is a wonder that anybody pays the least attention to them. But their word is still heard with breathless attention by "markets", economists and governments.
   The answer to the power of these speculators is not to please them but to control their activities and limit the havoc they can wreak in the lives of hundreds of millions of innocent people.
   International action needs to be urgently taken to restrict and tax speculative trading that can undermine economies and to restrain those governments that take crazy risks - Ireland being a prime example.

5. Government is the root of all evil

   This is an article of faith of market fundamentalists, who like fanatics in all spheres of life see the world in binary, black and white terms. Their mantra is "Government corrupt and bad, free markets good".
   Intelligent countries have evolved forms of collaboration between the main stakeholders in society - industry, employee representatives and community and local government. These interests are orchestrated by national government to formulate policies that are for the good of Society as a whole - and implementation of these policies is frequently delegated to the most appropriate stakeholder body with the agreement of the others.
   This approach in various forms can be witnessed in social market societies such as Germany, the Netherlands and the Nordic countries. In other countries like South Korea, government plays a very active role with industry and finance in developing key technologies and starting companies.
   The proof of this approach is that it works better in practice than free-market capitalism and weak government. Simply compare the statistics of social welfare and economic health of the countries above with Britain and the USA.