Conservatives, Bubbles, and Business
A quick note on conservatives’ view of businesses appears to be in order.
In general, we do not believe businesses are inherently pure, moral actors. We do not look at the housing bubble and the derivatives market and defend them on the grounds that they were legal, so nyaa, nyaa, the CEOs got away with it and everybody else is obligated to pick up the pieces.
Rather, we see business leaders as behaving rationally (if badly) within the environment that they are given. We observe that the function of government regulations is essentially to reduce people’s fear of risk and volatility, as is the implicit taxpayer support for government-originated economic backstops, like Fannie Mae and Freddie Mac.
Libertarians can make a persuasive case that society will come up with other mechanisms for reducing risk in the absence of government involvement, but if you’re going to have regulations, they’ve got to function, and over the past decade, they failed. Indeed, many of us consider such failure to be inevitable, as the human traits of greed and self-interest infiltrate both government and business.
The appropriate response, given those observations and assumptions, is clearly not to increase the depth of partnership between political forces and economic forces, which will thereafter merely conspire to better hide bubbles and pawn off the consequences to the rest of us when they explode. In the meantime, the culture itself must not absorb and normalize the recklessness and self-interest that has been on display among the powerful.