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Blindness as a cause for the latest financial crisis - and who did the blinding

There has been no shortage of politicians rushing to indict our free economies - everyone from the oh-so erudite French president to Democrats in the US Congress - but that is not the reason we are in financial trouble.

Politicians like to rail about capitalism. If they are French, they add 'Anglo-Saxon' capitalism. Gosh, do you think after all these years and pulling their chestnuts out of the fire during World War II the French could get over their Anglo-Saxon aversions? Did they never hear of 1066 and the Norman invasion? But back to our original point, since it is important to our financial health.

First, capitalism is a stupid name for our free economy. It is stupid because it suggests that your economy is only about capital when it is about so much more. Your economy is about people freely and openly creating, inventing, producing, marketing, buying, selling, trading and investing within a framework of fair laws. It is about dreams and hard work and team work and imagination. It is about giving freely and generously to charities and causes.

And as Walter E Williams wrote, it is relatively new in human history. Prior to it, "the way people amassed great wealth was by looting, plundering and enslaving their fellow man". Our economy has made it possible for people to make a living by serving each other.

Capital is part of these activities, but only part. Adam Smith described the free economy without ever using the word capitalism.

The word was first used in A Young Traveller in France (1792, OED) for the odious people who make our economy look bad - crooks. The writer called them capitalists. Marx was happy to exploit the word and smear the free economy with it.

This is like attacking food because some people overeat. It is a ploy that has worked very well.

Troubled as the free economy can be, it is far better than the government controlled economies we saw behind the Iron Curtain. There we found, in Churchill's words, that "the inherent vice of Socialism is the equal distribution of misery". And by misery, we really mean misery.

Adam Smith identified the things that would hurt us and our economy - among them monopolies, tariffs, high taxes and lack of ethics. He told us what a free economy needed. Vitally, a free economy needs accurate information. No one, including people in business, can make a good decision without accurate information.

Information loss went missing in the lead-up to this crisis. The Boston Globe explains who helped to blind our economy.

Update: US Treasury Secretary Henry Paulson was CEO of Goldman Sachs. According to Iain Murray He "is one of the people who thinks we should 'do something' about global warming as well. Funnily enough, his preferred solution is cap-and-trade, an artificial, government-created market with no underlying value whose main beneficiaries will be Wall Street at the expense of the average American. This amounts to a pattern of behavior, I suggest."

Or another form of blindness.

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