Sunday, August 25, 2002

LIBERALS are on the attack in the wake of the corporate accounting scandals. This is expected.

One of the stronger, more measured attacks came from George Soros writing for The New Republic. It's a clever article and has you shaking your head in agreement in a couple spots (mostly at the beginning). But like most Socialist agruments, you reach a point, a crucial one, when the entire argument hangs on a single point...and it just doesn't make any sense. Here's the head-scratcher:

"Second, by equating private interests with the public interest, market fundamentalism endows the pursuit of self-interest with a moral quality."

Forget the first clause and focus on the second. Is Soros saying that the pursuit of self-interest is without moral quality? Ah, yes, that is what he's saying:

"What distinguishes markets is exactly that they are amoral--that is to say, moral considerations do not find expression in market prices. That is because efficient markets by definition have so many participants that no single one can affect the market price. Even if some participants are held back by moral scruples, others will take their place at only marginally different prices. For instance, moralists cannot prevent alcohol and tobacco companies from raising capital on more or less the same terms as not-so-sinful enterprises."

It's so obvious: we have to give power to a select few in order to correct amoral meanderings of the market! Where have I heard this one before?

"It is exactly because markets are amoral that we cannot leave the allocation of resources entirely to them. Society cannot hold together without some consideration of the common interest. If private interests cannot be equated with the public interest, the public interest must be given expression in some other way than through the market."

Of course, but don't get Soros wrong -- he's no Communist:

"To be sure, in developing a new regulatory framework we must remember that regulations are liable to be even more imperfect than markets. They need a feedback mechanism that allows mistakes to be corrected. That is what makes regulated markets superior to central planning."

Central Planning! All the '70's retro styling must be confusing ol' George into believing he's back there.

If Soros thinks that markets are amoral "because efficient markets by definition have so many participants that no single one can affect the market price," and that self-interest has no moral quality, then I wonder what Soros thinks about Democracy and Free Elections. You know, that amoral thing where free people make individual, self-interested choices in order to choose their representatives? I mean, one vote can't possibly affect the outcome, can it?