Deregulation, Free Markets and Econ 101

The week of 15 September 2008 saw the near-collapse of the U.S. financial system. It is clear that the economic problems we are currently encountering are tied to attempts to deregulate financial markets that began in the 1990s.

Since the Reagan Revolution of the 1980s, it has been an article of faith among political conservatives that with deregulation, market forces take over, and the Invisible Hand automatically yields efficient markets. From this perspective, deregulated companies have no choice but to behave efficiently because the market forces them to do so. Shape up or die.