My Effort to Penetrate the Skull of an Anti-Free Marketer

by Mar 26, 2016Liberty & Economy0 comments

Watch what happens when I challenged this guy's anti-free-market dogma.

I recently had an encounter with someone so reflectively opposed to a free market that when I challenged him on his central assertions about it it quickly became evident that he had no concept of what a free market even is and preferred to adhere to his anti-free market ideology to making any effort to learn.

It’s an enlightening example of how people close their minds to other views and defend their position by engaging in logical fallacies like the ad hominem, strawman, and non sequitur, rather than producing an actual argument substantively addressing the errors pointed out in their thinking.

I got into a discussion with “Mike”, who wrote that when powerful countries engage in free trade, they become less competitive than other countries of similar GNP “who rely on trade bilateralism rather than multilateralism”. To this I replied:

What? It doesn’t make sense to me to say it makes a country “less competitive” to engage in free trade. This would need an explanation.

To which Mike replied:

Globalization and neoliberalism are based on a number of assertions–clichés and bubbles–that oftentimes have not been born out by the record.  IMO, “one-size-fits-all” models like multilateralism do violence to the complexity of international trade.  Free trade between nations with similar-size GNPs is often a very good idea, but these should be negotiated on a case-by-case bilateral basis of situational dictates rather than eschatological assumptions of a world evolving toward an “end of history” model.  Free trade between nations with vastly different size GNPs tends to led to even greater disparities–a quasi-imperialist situation–as the more powerful nation gets fat and lazy and the smaller nation gets used for cheap labor and raw products (imagine a professional football team playing a middle school team, and you get the idea).  The simple rules of trade is that you free trade when you are able to and protect when you have to (the idea of unconditional, unrestricted free trade is as radically off-base as an economic model of extreme autarchy based on universal protection).  The sensible protection of vulnerable markets buys time for them to become more competitive.  Remember, the ultimate purpose of an economy is to employ people within a nation and nto to enac efficiency for the people at the top at the expense of everybody else.  I explain this in greater detail in article below (and please excuse the bad editing).

He shared a link to another article he’d written. Note that he provides no actual explanation to answer my question. Instead, he merely repeatedly asserts things like that free trade between countries with very different GNPs tends to result in the richer country sucking wealth out of the poorer. But this merely begs the question. How so? Certainly, this occurs, but he offers no mechanism by which to attribute this outcome, the incredible disparity of wealth, to a free market.

The suggestion is nonsense. A free market by definition means no force or coercion is used to obtain ends, and, logically, two parties only ever engage in trade if mutually beneficial. There is nothing inherent in a free market that would lead to an outcome where laborers are effectively treated as indentured servants, as Mike suggests. This is evidently the outcome of government interventions into the market.

I replied:

Thanks for the discussion. On the second point, you seem to be mistaking so-called “free trade” agreements with free trade; and I strongly disagree that protectionism is sensible. Doing things like harming one industry for the benefit of another and increasing costs for consumers make little sense to me.

Mike replied by referring me again to his article and citing Thomas L. Friedman:

I discuss the perils of multilateral trade agreements in the article I attached to the last email.  Rather than spell them out again (I am at work), please take a look at that article and then respond to the points made therein, if you disagree.  Without some degree of protection–in a world of weak sovereignty and permeable borders–American works will eventually make what workers to in other nations.  A “flat world” (a la Friedman)  really mans flat labor markets.  The genius of the US economic miracle of the mid-20th c. was that we had a working class that was also a middle class.  This would not be possible under a neoliberal model dominated by free trade agreements.  GATT and NAFTA–after an initial boom–have been catastrophic to US labor markets.

So I took time out of my day to have a look at his article, which did not answer my question, but was more of the same, such as a suggestion that the economy is so much worse today than before the end of WWII on account of freer markets. I replied,

You continue to mistake so-called “free trade” agreements with free trade.

The way you decry freer markets after WWII than before makes me wonder whether you would prefer the standard of living of 1945 to that of today? What outcome, exactly, are you unhappy with that you attribute to free markets? You don’t actually specify.

And I can’t imagine how you arrive at the conclusion that “American workers will eventually make what workers in other nations make as labor wages find an entropic world mean” in the absence of protectionist policies. That just makes no sense (which isn’t surprising, if it’s something that originated in the mind of Thomas L. Friedman; although perhaps he was borrowing it).

Personally, I like having things like cell phones, computers, Kindles, and such, among countless other fruits of the labors of investors and entrepreneurs seeking to use free trade to earn a living while also raising the standard of living for the entire society. I was a bit astonished to see Mike suggest he’d prefer the economy of 1945 to today’s (though note how his phrase “an updated version” renders his first sentence utterly meaningless):

I would certainly prefer an updated version of our 1945 economy (an integrated and diversified economy, about 1/3rd of which is dedicated to actually making things) to the increasingly neoliberal model of today.  If you honestly believe that the economic trajectory of the period from about 1970 (certainly since the 1980s) to the present is healthier for a majority of Americans than that of say 1945 to the late 1960s, then there is little I can say that will change your mind (how does US economic growth from the late 1940s compare to that of today?).

If you are keeping an open mind about this, I would recommend that you read Barlett and Steele’s Betrayal of the American Dream (about the re-regulation of the American economy toward special interests) and Tony Judt’s Ill Fares the Land (as regards the dismantling of social democracy, but he also talks about the consequences of earlier incarnations of globalization).  Chrystia Freeland’s Plutocrats is also very good (and not especially judgmental).  An economy based on finance and other high and low-end services simply does not trickledown like a well-regulated manufacturing economy. If you have already swallowed the Cool Aide on the blessings of multilateralism and globalization, I can only wish you joy of your choice with a hint of foreboding irony.

As for American workers eventually making what they do in other nations (I thought I was fairly clear about this in the article), I would merely point to stagnant salaries and disappearing jobs (our two biggest exports at this point are jobs and dollars).  If there are no trade barriers, what is to stop it (unless, of course, there are no jobs left at all for American industrial workers)?  There is no way that the economy can pick up the slack by creating high-tech white collar jobs for all of the workers in industry who have lost their jobs or who are now reduced to working at McDonald’s or Walm*rt (where they sell cheaply produced Chinese crap).

The key thing to note here is how once again Mike isn’t actually responding to the points I had made, but just continues to repeat the same fallacy over and over. So I replied,

I simply do not attribute negative economic outcomes from about 1970 to the present to the free market. You question today’s economic lackluster as a specific example, so, yes, let’s take that. What caused the Great Recession? The free market? Nonsense! Just the opposite. The financial crisis was a consequence of a burst housing bubble that was fueled by the Federal Reserve’s inflationary monetary policy and government policy of encouraging homeownership. Other examples of problems created by government intervention in the market wrongheadedly attributed to having too much liberty in the marketplace abound.

Now, Mike at this point proved incapable of producing an argument to support his position. So he instead sent my comments to a friend of his, David, and forwarded David’s retort to me:

His [David’s] reply–which I agree with–is thus:

“To be charitable, Mr. Hammond has a point when he attributes the “Great Recession” to  a bursting of the US’s (and its financial collaborators’, e.g., Ireland, Spain, Greece, Britain, et al.) housing bubble … a bubble nurtured and exacerbated by irresponsible and often fraudulent practices enthusiastically embraced by Wall Street and a Government –Clinton, Bush and Obama bolstered by both parties in Congress, who supported, facilitated and expanded on the powers of Big Finance combined with government to run roughshod over any obligations of transparency and accountability, then, when unable to pony up the huge amount of accumulated debt based on shoddy financial dealings, were for the most part bailed out by the American tax payer.  There is hardly any disagreement among respected economists and financial journalists on the dramatic increase in risk-facilitating legislation (statutory as well as regulatory) that maximized speculative profit while minimizing risk to the world’s biggest financial players, at least those based in the US along with their associates and acolytes world-wide.

But your point, Michael, is well taken:  if the housing bubble had occurred in a country with a notably diverse and innovatively productive economy –as was still the case when the Savings and Loan scandal resulted from a similar bubble during the 1980s, the our society would almost certainly have weathered the storm more confidently and recovered more vigorously.  The current economic picture of America is that of a once powerful and productive nation no longer capable of manufacturing most of its consumer durables, beset by enormous private and public debt –the latter which will almost certainly never be fully repaid– as well as by a seemingly endless and increasing balance of payments deficit.  The result is very high real unemployment (despite cooked “favorable” statistics proffered by the government, the actual percentage of full-time workers within the labor force population is at the lowest level since the Great Depression), lower demand for most goods and services (other than luxury items), and a radical divergence and alienation between the increasingly impoverished many and the increasingly wealthy few –this disparity completely at odds with the political and economic  centrality of America’s once dominant middle class.

So Mr. Hammond:  If you think America is thriving these days, turn away for a while from the very few centers of wealth and glamour –the Washington DC area, New York City, Seattle, plus a handful of wealthy suburbs and a few hundred gated communities and resorts.  You won’t have far to drive to see what is left of Main Street America –where the vast majority of Americans live– with increasingly shabby and dysfunctional public structures –bridges, public transportation, highways and bi-ways, airports, power stations; failing public schools and universities; poorly funded libraries and parks; shopworn malls that sell almost entirely foreign-made (and often shoddy) consumer goods.  And of course decent paying jobs are increasingly hard to come by.  The Great American Dream is mostly a thing of the past.  How else explain the fact that a demagogue like Donald Trump, and a marginal political maverick like Bernie Sanders, have shown enormous popular appeal despite the disapproval of the political establishment and of the mainstream media?”

Note that David, like Mike, despite using a great many words, had almost nothing of substance to say relative to the points I had made, instead descending into some bizarre lecture that seems to rest on the assumption that I’m some trust-fund kid living in a wealthy suburb who’s never worked a day in my life. Addressing what little of substance he had, I replied:

Yes, I presumed that you would come back with the argument that deregulation caused the financial crisis precipitated by the bursting of the housing bubble. So please be specific and give me an example. What deregulation, specifically, are you referring to primarily?

And, to be clear, are you denying that Fed policy was a causal factor, and are you also denying that the government’s policy of encouraging homeownership was a causal factor?

What a peculiar diatribe by your friend. It’s hard to fathom how he got any of what he is attributing to me out of what I actually said. How wonderful it would be if he would actually address my points, instead.

I expected Mike to come back with an answer to my question about what deregulation he was referring to; I assumed he’d say the partial repeal of the Glass-Steagall Act. I was fully prepared to counter that argument, but he couldn’t even serve up that much. Instead, he came back with more meaningless statements and mindless repetitions of the same fallacy I’d already pointed out to him repeatedly.

I will reply in length in a day or so, although I do not know what specific points made by me or Mr. Isenbergh you are disagreeing with and why.  I will reply, but please let me know what parts of Mr. Isenbergh’s statement you believe are incorrect or inaccurate.

In order to believe that deregulation is fundamentally a good thing, you would have to adhere to the startling claim that people are fundamentally good and will do the right thing even if not legally bound to, and when it would be profitable not to–this is not a conservative (much less a very realistic) outlook.  My view is that people are capable of good, but that it is not always dominant, and when power, money, and interest are involved, powerful interests must be regulated toward the public good for mutual benefit.  Consider that our period of greatest taxation and government regulation of the economy–roughly 1945-1970–was the period of our greatest national prosperity.  Full stop.

While overregulation stifles growth and leads to something like the Soviet Union, a complete lack of regulation is an equally extreme position and leads to the horrible abuses of the Gilded Age (or present-day sweatshops in the developing world)–and both represent extreme positions.  Where there is no regulation, the most aggressive elements simply take over.  If you disagree with this point, you may want to peruse periods where the law was non-existent or unenforced (e.g. Europe after the fall of Rome, or the old west).

It is ironic your journal claims to promote views not found in mainstream sources, and yet throughout this thread, you have done little more than defend the status quo and the dubious conventional wisdom and deregulatory clichés of the day.  I have enjoyed our discussion though, and would humbly suggest that you expand this conversation with your readers by publishing my article.

Of course, it was hardly necessary for me to point out what I thought inaccurate about David’s retort, since he hadn’t bothered to point out what he thought inaccurate about what I’d said in the first place! Referring to the part I’ve bolded above, I returned:

I could just as well say: To hold the belief that regulation is fundamentally a good thing is to adhere to the startling claim that legislators are fundamentally good and will do the right thing even if they could use their power to serve their own political or financial interests.

How you interpret anything I have said as defending the status quo is beyond me. As you seem to be exerting quite some effort to not have a serious discussion, I’ll respectfully decline your request to reconsider the piece.

Mike replied by actually suggesting that, yes, Congresspersons are fundamentally better people than businesspersons (What about Congresspersons who are also businesspersons?).

Legislators have oversight (executive, judicial, regulatory, opposing party, and the voters themselves).  Business has no such institutional oversight or counterbalance (unless one brings in mythical “invisible hands”).  Will gladly pit the intentions of FDR and his regulators against those of modern Wall Street any day.  My reading of those at the very top of the RNC and DNC is that of neoliberalism, which is what I infer you outlook to be.

So Congress have “oversight”, but the market does not. Of course, reality is just the opposite: while Congress exudes corruption, business are indeed accountable to the market; when we witness otherwise, no the grandest scales it’s when businesses lobby the corrupt Congress in order to gain access to government use of force to achieve their aims, rather than by doing so via the free market.

Then there’s this laughable suggestion that the upper echelons of the primary political parties are adherents to the principle of a free market. My reply:

I don’t know what you mean by “neoliberalism”, but can assure you that if this is what is espoused by those at the very top of the RNC and DNC, then it has nothing to do with free markets and is a world away from my own outlook.

Here’s your central fallacy: Government bureaucrats making decisions at best arbitrarily (i.e., assuming only the best of intentions) do not know better than the market with its pricing system how to efficiently direct scarce resources toward productive ends as determined by the will of consumers.

Which brings us right back to the point I raised earlier about how you misattributed the financial crisis to the free market when in fact it was a consequence of government intervention in the market; specifically, again, the Fed’s inflationary monetary policy and government policy of encouraging homeownership.

Mike’s reply:

“Neoliberalism” is a term of economics and political science to denote an outlook dedicated to the spreading of free markets (harkening back to traditional or “old” liberalism or the 18th-19thc. perspective of embracing a free trade ideology as advocated by economist like Adam Smith and politicians like Gladstone–not to be confused with modern progressivism that is more commonly called referred to as liberalism by politicians and in the media).


Yes, I’m aware of how the term “neoliberalism” is popularly (and wrongly) used, e.g., your absurd suggestion that the top members of both parties are strong advocates of a free market.


The last refuge of a scoundrel is to quibble over the meaning of words.

Absurd, huh?  Foreign policy advisors over the last 20 years: Richard Pearle (R), Paul Wolfowitz(R), Elliot Cohen(R), Dick Cheney(R), Samantha Power(D), Susan Rice(D), Hillary Clinton(D), Victoria Newland(D)–this is the tip of the iceberg, and all are interventionists who pushed US military hegemony and the expansion of free markets via multilateral agreements (the last realist administration we had was that of the senior Bush–Scowcroft, Baker, Powell).  Don’t let the mud fights on the Hill fool you: at the highest levels of the DNC and RNC, there tends to be agreement over the role of the US in the world (again, see Bacevich’s Washington Rules).

Hopefully you will one day awake from your ideological slumber and smell the coffee.  If you don’t read anything else this year, please take a look at some of George Kennan’s writings and compare his policy predictions and prescriptions from 1946 to 2001, relative to those of the modern policy thinkers who have destabilized the Middle East for decades to come.  Don’t think this thread is especially fruitful anymore.  Thank you for considering my submission.  Below for your enjoyment is an (already published–so this is no a submission) article on a more sensible course for the Middle East.


To observe how you falsely attribute to the free market consequences of government intervention in the market, i.e., the housing bubble and financial crisis it precipitated, is hardly to “quibble”. It goes to the very heart of the matter.

Yes, your statement is absurd. Neocons are free market advocates? Utter nonsense. Obviously, their paradigm is the use of government force to obtain their ends, which is anathema to the principle of a free market.

Crony capitalism and free market capitalism are hardly the same thing, the former being anathema to the latter, so stop treating them as synonymous and blaming the latter for ills caused by the former.


The housing bubble was the tip of the iceberg. Blaming it for the collapse of ’08 is like blaming a fuse for an explosion.  By 2008, the financial sector was bloated an don the verge of collapse.  Enormous bets were made of mortgages, the problem was that the people who sold mortgages were paid for the number they made rather than the quality.  Things had become so deregulated, that it was possible for lenders to hand out mortgages, even though it was mathematically impossible for the borrower to pay it back (why on earth this was legal is beyond me).  This was done with collaboration with banks, insurance companies, and mortgage rating companies.  The result was essentially legalized fraud and a reflection of a deregulated, excessively pro-finance economy.

Add to this an exponential growth since the 1980s of instruments like derivatives and swaps that came to resemble (and continues to resemble) a huge Ponzi scheme.   Ratings companies gave AAA ratings to questionable financial instruments which were not regulated.  Of course the larger problem was in seeing finance as an end in itself, as opposed to haw it was traditional seen as a means to provide liquidity to actually make things.

The real estate bubble sparked the crisis (the mortgage and housing sectors had obviously little oversight or regulatory monitoring), but again, it was little more than a catalyst, and a more diversified economy would have absorbed the blow better (as the economy did in 1989 during the S&L crisis).

As Tony Judt notes, the fact that this was all a great big lie is indicated by the fact that Paulsen (under Bush) and then the Obama administration, immediately adopted Keynesian-like remedies until the crisis had been weathered.  Then it was back to business as usual.

About the neocons, Mike then added:

By the way, you analysis of neocons is flat-out wrong and incredibly naïve.  This nation uses undeclared wars in an attempt to secure US hegemony, thus guaranteeing free markets.  Who were/are the nations and leaders who opposed US hegemony?  Russia, Iran, Libya under Qadaffi (sp)m, Iran, Iraq under Saadam. Now who are the countries that we/NATO have attacked or merely vilified?  The list is the same.

The discussion then branched into two threads, one on the neocons and the other sticking to the housing bubble. To his assertion that the financial crisis would have occurred even if there hadn’t been a housing bubble, I observed:

Without the housing bubble, there would have been no financial crisis, as your own argument indicates, language of it being just a “tip of the iceberg” and a “catalyst” notwithstanding. Furthermore, by your own account, part of the underlying problem was the quality of the mortgages being securitized, which brings us right back to my point about how government intervention in the market caused the crisis, as it was Fed policy following Keynesian prescriptions and the policy of encouraging homeownership that inflated the bubble and resulted in the market being flooded with these subprime mortgages. You also bring up the ratings agencies, which yet again illustrates how you err in blaming the free market, as these agencies are a government-created oligopoly.

Stop blaming the free market for consequences of government intervention in the market.

Mike continued to insist that the financial crisis would have occurred had there been no housing bubble (naturally making zero effort to explain, for the obvious reason, what other possible mechanism would have resulted in the same outcome):

It would have happened sooner or later, it just would have had a different trigger.  As it did in fact happen, it’s kind of a moot point.

So his argument boiled down do: the financial crisis happened, therefore we needn’t bother to understand what caused it; the cause is irrelevant. I simply repeated:

No, it would not have happened on the absence of the housing bubble. What a nonsensical assertion.

Mike argued:

Your assumption presumes that the market was otherwise healthy–now that is an absurd proposition (why did the government end up bailing out so many banks if they were otherwise healthy.  You are showing yourself to be a silly man, sir.

Of course, to say that the financial crisis would not have occurred if there wasn’t a housing bubble is not to say that the market was “otherwise healthy”, which Mike correctly notes is absurd (on the grounds that it’s absolutely meaningless alone). There were certainly many other problems with the economy, but that, unlike the housing bubble, didn’t cause the financial crisis.

Mike’s replies boiling down to logical fallacies, personal insults, and conspicuous lack of substance, I replied:

You’ve invented a non sequitur and falsely attributed it to me to win the argument. Congratulations, sir. Two logical fallacies at once. Most impressive!

Going back to his email calling me “naive” and insisting that the neocons are free-marketers, I replied:

You assert what I said about the neocons is “flat-out wrong and incredibly naïve”, but don’t explain how so. Then you repeat the same fallacy I’ve already pointed out to you numerous times: again, the noecons’ paradigm of using government force (including, obviously, war) to achieve ends is anathema to the principle of free markets. Not sure what part of that you don’t understand.

Impervious, Mike continued to cling to his delusion that the neocons are free-marketers:

I thought my point was fairly clear: if one does not see the link between our foreign wars and US military hegemony (both advocated by neocons) and the expansion/protection of free markets, it suggests either naivete or obtuseness or both.

Got to end it here.

Struggling to comprehend Mike’s incomprehension, I tried once more to point out his fallacy to him:

Still not clear what part of this you don’t understand: the use of government force to obtain ends is anathema to the principle of free markets. To say that neocons, who advocate war to preserve global hegemony for the political and financial interests of the elite, are proponents of free markets is simply a contradiction in terms. It’s a logical impossibility.

He came back with this puzzling comment:

No sir, the use of the US military as the bull dog of globalization has been quite effective (can’t help but think that you aren’t serious at this point).

To which I sent my final reply:

“No sir, the use of the US military as the bull dog of globalization has been quite effective (can’t help but think that you aren’t serious at this point),” he writes very seriously, as though I had argued that the use of the US military to achieve ends has not been effective.

Mike then blocked my emails and put in his last word:

Unfortunately this stopped being interesting a while ago.  Am blocking your emails, so if you reply, I will not get it.   Thank you for considering the essay.  In all seriousness, I sincerely hope that you develop a more nuanced understanding of what is happening in this country.  To paraphrase Kant: awake from your dogmatic slumber–you might make some real contributions if you abandon the clichés and conventional wisdom of the day.

So there you have it. If you don’t reflexively blame the free market for any ills one can conceive of in an economy, then you are a naive and silly person who is ideologically blinded from realizing that that the top leaders of the Republican and Democratic parties are fervent advocates of free markets; that the natural outcome of freedom in the marketplace is one-sided trades wherein only one party receives any benefit at the expense of the other; and that the financial crisis was caused entirely by a failure to regulate the abuses of the free market, not by the Fed’s monetary policy or the government’s massive intervention in the housing industry.

Ron Paul vs. Paul KrugmanI’ll close with Paul “Conscience of a Liberal” Krugman:

“[T]he Federal Reserve successfully replaced the technology bubble with a housing bubble. But where will the Fed find another bubble?” – Paul Krugman, August 7, 2006

If you are among those who have been led to believe that the financial crisis was a consequence of the market being too free, you’ll definitely want to check out my book Ron Paul vs. Paul Krugman: Austrian vs. Keynesian economics in the financial crisis.

Learn More About the Book!


UPDATE, March 29, 2016: Turns out Mike didn’t block my email after all. He replied to call this post “a completely hatchet job”, calling me “a real cheap shot artist”, and calling my publication Foreign Policy Journal nothing big.

Still incapable of producing an argument, he turned again to his friend David, who came up with this:

Mike –from the looks of it this Mr. Hammond seems like a young, relatively inexperienced (politically & economically) acolyte of the recently dominant but increasingly challenged, anti-government programs taught in the economics departments of our elite universities:  the dogma that the unfettered “free market” inevitably finds its most “efficient “equilibrium” if left to its own devices, producing in the long run the greatest material progress for the greatest number.  In other words, an admirer of Milton Friedman, the Austrian School and possibly Ayn Rand.  Of course the economic success of America was never based on anything resembling such a free market –until the 1980s our industries and services were always more or less protected from foreign competitors, who reciprocated in kind, often to the benefit of all concerned.  What has occurred over the past several decades is the creation of an unholy alliance between Big Money (multinational corporations, the financial and insurance sectors, dominant energy and extractive companies, the military/industrial complex) and Big Government (both parties, and at State as well as Federal levels) to facilitate the global expansion of wealth not through production of better and more accessible goods and services, but overwhelmingly through opportunities for rent seeking, i.e., to increase monetary value through virtually guaranteed profits based on casino-like and/or monopoly-like extractions from increasingly indebted working people and gullible or reckless customers.  For most of those involved in such dubious financial transactions, making money thusly is a lot easier, and a lot more certain, than trying to produce affordable and competitive goods and services.  Thus the financial branches of corporations such as Ford, General Motors and General Electric have increasingly sucked up the energies and resources of these formerly purely manufacturing organizations.

By the way, Mr. Hammond errs when he states that the “[major credit] rating agencies [Standard & Poor’s, Moody’s, and Fitch Ratings] are a government created oligopoly.”  In fact, they were founded by Mr. Poor, Mr. Moody and Mr. Fitch, respectively –many decades ago– and are (and have always been) privately run and owned –currently by McGraw-Hill, Moody’s Corporation and Hearst Corporation, respectively.

So to summarize:

David begins by assaulting my character rather than my argument on the basis of assumptions he makes about me.

From that firm footing, he proceeds to beg the question by assuming the very thing we are debating as his premise; essentially, “no, I’m right, and you’re wrong”, with no argument necessary. He simply asserts as though fact that post-WWII economic growth in the US up until 1980 or so was because of rather than despite anti-free market policies.

Then he essentially reiterates the same point I already made about how in the US what dominates is crony capitalism, not free market capitalism.

The one substantive thing David says is to deny that the credit ratings agencies are a government-created oligopoly. His argument is: These agencies are privately owned; therefore, they are entities of the free market. But “private” as opposed to “public” is not synonymous with “free market”, for the reason made obvious by his own discussion about the collusion between the private and public sectors.

I’ll just cite from my book Ron Paul vs. Paul Krugman (along with the source notes) on this point:

In May 2007, Krugman asked “Why were the bond-rating agencies”—which had been giving mortgage-backed securities the highest “AAA” ratings—“taken in (again), and where were the regulators?”[i] Yet the implication that an unregulated free market was the problem also fails when it comes the rating agencies, which are effectively a government-created cartel.

The few Nationally Recognized Statistical Rating Organizations, such as Standard & Poor’s and Moody’s, benefit from an oligopoly market structure in which their ratings are recognized by the SEC. The government has to a large extent made these agencies immune from civil and criminal liability for malfeasance, even though the SEC relies on their ratings in making regulatory determinations, which is to say the SEC has outsourced some of its regulatory functions to the ratings agencies oligopoly. A good credit rating thus implies regulatory compliance of the issuer being rated, which pays for its own rating. Traditionally, ratings agencies had sold ratings to investors, but once this cartel was established, they began charging fees to rate issuers of debt, which is where most of their revenue now comes from. In a free market, this apparent conflict of interest might not pose such a hazard, since the agencies would still depend on the credibility of their ratings to remain competitive. However, the same cannot be said when any competition they might otherwise have is eliminated by government decree. Going back to Krugman’s question, “Why were the bond-rating agencies taken in (again), and where were the regulators?” The answer is that they were the regulators! And this was not the failure of a free market, but of government intervention in the market.[ii]

[i] Paul Krugman, “Just Say AAA,” New York Times, July 2, 2007,

[ii] Mark A. Calabria, “Did Deregulation Cause the Financial Crisis?” Cato Policy Report, Vol. XXXI, No. 4, July/August 2009, Partnoy, Frank, How and Why Credit Rating Agencies are Not Like Other Gatekeepers. Financial Gatekeepers: Can They Protect Investors?, Yasuyuki Fuchita, Robert E. Litan, eds., Brookings Institution Press and the Nomura Institute of Capital Markets Research, 2006; San Diego Legal Studies Paper No. 07-46. Available at SSRN:

So, again, if you’re of the belief that the financial crisis was a consequence of an overabundance of liberty in the marketplace, Ron Paul vs. Paul Krugman is for you!

Get Your Copy Now!

UPDATE, March 31, 2016 — After sending the updated post to Mike, he replied with:

Although I have not read it, thanks for the update–I suppose I will have to watch what I say, now that I know your modus operendi.  I must admit that I was not particularly surprised by your article, and got a small chuckle out of the confirmation of my suspicions.  After all, a cut-and-past straw man drawn from a private email correspondence without the prior knowledge is the mark of a complete amateur.  Bush league.

I have known editors in the past who have vigorously disagreed with my ideas, but the honest ones were not afraid to let the ideas speak for themselves by allowing me to present them in their best possible light.  Nobody has ever taken the words of a conversation out of context and presented them in an attempt to be vindictive–congrats.  Such an approach hardly suggests that you have confidence in your position, and I am not sure whether you are a garden variety cheap shot artist or a genuine moral coward, although I suspect you probably know.

My grandfather once told me to never debate (“mix it up” was the way he put it) with a person who can not be shamed by his or her own dishonorable acts.  Thank you for proving him right.

I suspect you will probably do a careful edit of this, and then do another courageous high school-level cut-and-paste job.  But if you ever want an honest debate, let me know.



Now, this is a fascinating argument. He accuses me of misrepresenting him by carefully editing his words, quoting him out of context, and creating a strawman argument in place of his actual argument.

How puzzling a charge, considering the fact I’ve pasted his entire comments here verbatim, from start to finish. Oh, the irony that here he is accusing me of being dishonest when he has felt it necessary to resort to outright lying in a vain attempt at character assassination, in lieu of a actual argument to support his demonstrably untenable position.

If Mike wished to identify himself, I’d be more than happy to have a debate with him on this subject, were it not for it being already abundantly clear that he wouldn’t be capable of keeping it honest.

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About Jeremy R. Hammond

About Jeremy R. Hammond

I am an independent journalist, political analyst, publisher and editor of Foreign Policy Journal, book author, and writing coach.

My writings empower readers with the knowledge they need to see through state propaganda intended to manufacture their consent for criminal government policies.

By recognizing when we are being lied to and why, we can fight effectively for liberty, peace, and justice, in order to create a better world for ourselves, our children, and future generations of humanity.

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