While there have been many failures to lie at the door of government, its failures are nothing compared to the failures of the private sector. For the last 30 year or so, we have been subject to a very successful campaign extolling the vices of government citing horror stories of government waste, failed policies and personal tragedy while at the same time deifying the marketplace.
However the arguments that would have ended pretty quickly any debate on the reform of the marketplace have fallen by the wayside as they have been disproved in the most dramatic fashion. The last five years have confirmed just about every argument made for reform or even the abolishment of the marketplace as the never ending drive for growth has led to the collapse and concentration of banks in a bid to survive the biggest crisis since the great depression.
We have been exposed to the folly and the outright deception of respected financial institutions as they risked their reputations to increase profits and ended up causing market failure on a grand scale. The recent LIBOR scandal involving Barclays is another example of what happens when profit motive is the only motive involved in the market sector, as banks actively shirk their responsibilities to their clients and customers in the pursuit to make money.
While the government cannot escape a large portion of blame for economic difficulties of the five years as it has failed in its task of regulating the activities of Banks as even regulatory bodies have been subject to widespread logic that dictates that in order for markets to flourish, government intervention must be minimal or avoided altogether.
This logic, despite all the events in the last five years that have damaged its credibility beyond repair, still holds strong among those endowed with the power to craft a new financial regime based on sustainable polices as the world has just found out just how finite the possibilities of the marketplace really are.
This can explain why most of the regulatory reforms are mostly weak and allow banks to use the same practices that caused the collapse in the first place. Regulating the financial system is going even more difficult as banks, due to government forced mergers, have become an even bigger liability than before as if there should be another market failure, the ‘too big to fail’ arguments for government intervention will be untenable.
In sum, the arguments against government agency in the marketplace were part of an effort to glorify the market in the interest of those who sought to benefit from a weak government which has now collapsed under the weight of events of the last five years. Regulating the financial marketplace will be even more difficult as banks have become even more concentrated due to forced mergers. Government official must make reforming the financial system a top priority as due to the banks being concentrated, the taxpayers maybe be able never mind willing to fit the bill.