This being an election year when the contest is particularly close, truth can safely be expected to be the first casualty. The name-calling and one-upmanship between the candidates and their parties has already begun.
There is great temptation on the part of everyone involved in the debate to take the path of maximum populist appeal. The unanimously agreed villain of the piece? Deregulation. The solution? Lots of regulation.
So now the answer is to control, stifle, smother and shackle the economy so it can't collapse? You poor sods, now you've really done it!
No one can recommend the free market in the current climate without being booed, it appears. The free market (taken in the sense of an unregulated market) has now been blamed for all the world's ills. Yes, the lack of controls has been a major culprit, but it wouldn't have been such a killer if the market had been truly competitive. The collapse of a few players wouldn't have developed into the market-threatening crisis that it has now become.
In the process of blaming the free market, I fear we may be walking away from the one thing that can get us out (and forever keep us out) of this kind of mess - a free market! And my regular readers know that when I say "free market", I mean a liquid market. A market with plenty of competition. Because freedom for me does not carry the petty meaning of a freedom without restrictions. It means a freedom that cannot be taken away. Only liquidity (the inability of any single player or small group of them to influence the rest of the market) can protect the freedom of all players in the market. To enjoy freedom, we need to (paradoxically) accept the constraints demanded by freedom, i.e., the guaranteed powerlessness to unduly influence others.
I think we should start using the phrase "liquid market" or "competitive market" instead of "free market" from now on. The term "free market" has been tainted, ironically because the financial markets weren't really free but highly illiquid and oligopolistic with a few very large and powerful players who operated without the checks on their behaviour that a competitive environment would have naturally provided. It's no use trying to educate people about what the term "free market" should really mean. In the aftermath of a systemic collapse, no one wants to hear what would appear to be hair-splitting or intellectual sophistry. People cannot now be convinced that a free market is the solution we need and not the problem.
I think we need to start characterising the problems of the last few years as an "oligopoly", an "illiquid market" or as "cronyism". Any and all of these terms would be an accurate description. And we should then point to "liquid markets", "competition", "transparency" and "accountability" as the answers, rather than "regulation".
Competition provides most of the regulation we really need. All we need to do is ensure that our markets stay competitive.
Regulation by government bodies is important and has its place, but knee-jerk legislation mandating more regulation will exacerbate the problem. Complexity hinders transparency.
Will the wisdom of crowds see through the current round of election-sozzled name-calling and understand what the economy really needs?
I'm hopeful, but not optimistic.