Paul Krugman's distorted eye sight

Why We Regulate - Paul Krugman, New York Times

 

They say if all you have is a hammer, everything looks like a nail.

“Why, exactly, are banks special? Because history tells us that banking is and always has been subject to occasional destructive “panics,” which can wreak havoc with the economy as a whole. Current right-wing mythology has it that bad banking is always the result of government intervention, whether from the Federal Reserve or meddling liberals in Congress. In fact, however, Gilded Age America — a land with minimal government and no Fed — was subject to panics roughly once every six years. And some of these panics inflicted major economic losses. ”

I ships, a hole in the side is a definte panic. Ship builders learned to comparrtimentalize the ship to avoid unacceptable losses. The Titanic did that but not too well.

There fore, the solution to major economic losses, is to campatmentalize the major losses until they become monor losses. A prudent bussiness man knows to do that. Should the government have a role in assuring no major losses? No.

The government has a role in making a level playing field, especially to assure the small players aren’t trod on by the big guys. Now days it is most likely that the government is troding on the small guys while holding hands with the big guys because as Paul says: “Just to be clear, businessmen are human — although the lords of finance have a tendency to forget that — and they make money-losing mistakes all the time.” This applies to the Federal Government (in Spades), and to Paul Krugman.