The cover of Financial Fiasco: left - the original, copied from Amazon.com; right - the Bulgarian translation, copied from the site of the publisher MaK.
After Hazlitt's Economics in One Lesson, another libertarian book has been published in Bulgarian in my translation: Financial Fiasco, by Swedish historian Johan Norberg (published by the Cato Institute, 2009). I have written about it also in my Bulgarian blog; Bulgarian readers can go directly there.
This book describes and analyses in a way understandable for lay readers the global financial crises which reached its maximum in 2008 but is still reluctant to go away. According to the author (and I agree), the worst in this crisis is that it has caused comeback of the ideas for massive government intervention in economics. Norberg discusses and rejects the arguments for such intervention and defends the free market. To give the reader a taste of Financial Fiasco, I am quoting below parts of the closing Chapter 6 (but the other chapters are also excellent, so read the entire book if you can!).
"What exactly happened? How could overenthusiastic homebuyers in the United States sink the global economy? Many politicians across the world quickly declared that the crisis must have come from inside the financial system, that the reason must have been that market players had been given too free a rein and made toobig mistakes...
Politicians who had never hesitated to claim credit for each one tenth of one percentage point of growth or for each new job created now immediately went to great pains to pin the blame for the downturn on their lack of influence. But did they lack influence?
Critics say that the financial market was completely unregulated. But 12,190 people work full time on regulating the financial market in Washington, D.C., alone—five times as many as in 1960. The big wave of deregulation is said to have begun in 1980. Since then, the cost of the federal agencies in charge of regulating financial operatorshas increased from $725 million to $2.3 billion, adjusted for inflation.
Critics say that the financial market was completely unregulated. But 12,190 people work full time on regulating the financial market in Washington, D.C., alone—five times as many as in 1960. The big wave of deregulation is said to have begun in 1980. Since then, the cost of the federal agencies in charge of regulating financial operatorshas increased from $725 million to $2.3 billion, adjusted for inflation.
A ‘‘Hoover myth’’ is now developing about President George W. Bush to the effect that he was some kind of a deregulator. However, during his eight years in the White House, new federal regulations were added to the tune of 78,000 pages a year. That is the highest pace in the history of the United States. Bill Clinton reduced the number of federal bureaucrats by 969; Bush increased their number by 91,196. Clinton reduced the cost of financial regulation slightly;Bush increased it by 29 percent...
(Some people) talking about inadequate regulation simply mean that the authorities did not understand the risks in the markets, paid attention to the wrong things, and made reasonable behavior harder and unreasonable behavior easier. Indeed. But that the government often acts incompetently is not news. And that is precisely why it is pointless to compare the real-life market economy, in all its imperfection, with an ideal image of how hypothetical, perfect
authorities would govern the economy. It goes without saying that we must compare it with the real, imperfect authorities that we actually have.
The problem was not that we had too few regulations; on the contrary, we had too many, and above all faulty ones. Some readers may object that by pointing this out, I am mainly quibbling about the meaning of words and fighting an ideological battle. I grant you that you may have a point there. Please feel free to call the problem whatever you like if you have political reasons for doing so, just as long as you are aware of what it consists of. Because what would be fatal would be for slogans about ‘‘insufficient regulation’’ to give rise to the idea that the crisis happened because the government was absent, and that the government must therefore intervene and regulate more to avoid a repeat...
authorities would govern the economy. It goes without saying that we must compare it with the real, imperfect authorities that we actually have.
The problem was not that we had too few regulations; on the contrary, we had too many, and above all faulty ones. Some readers may object that by pointing this out, I am mainly quibbling about the meaning of words and fighting an ideological battle. I grant you that you may have a point there. Please feel free to call the problem whatever you like if you have political reasons for doing so, just as long as you are aware of what it consists of. Because what would be fatal would be for slogans about ‘‘insufficient regulation’’ to give rise to the idea that the crisis happened because the government was absent, and that the government must therefore intervene and regulate more to avoid a repeat...
When businesspeople and senior executives do a bad job, they are—eventually, at any rate—thrown out on their ear. When politicians and financial authorities do a bad job, however, they get more power... . After government authorities had helped create the worst financial crisis
in generations, the climate of ideas has now shifted dramatically in the direction of bigger and more active government... Create a crisis, and people will give you more power to fight it. This
could be called the ‘‘Stockholm syndrome’’ of politics—our utter dependence on our hostage taker makes us develop a relationship with him and start taking his side against the rest of the world... As I have shown in this book, today’s crisis is in many ways the result of our failure to break sufficiently free from the 1970s mentality and from the dream of the government as supervisor, monitor, helper, and supporter."
in generations, the climate of ideas has now shifted dramatically in the direction of bigger and more active government... Create a crisis, and people will give you more power to fight it. This
could be called the ‘‘Stockholm syndrome’’ of politics—our utter dependence on our hostage taker makes us develop a relationship with him and start taking his side against the rest of the world... As I have shown in this book, today’s crisis is in many ways the result of our failure to break sufficiently free from the 1970s mentality and from the dream of the government as supervisor, monitor, helper, and supporter."
1 comment:
Great post.I'm guessing it only gets worse when language barriers come into play as well. It's rather easy to fall into the trap of exacerbating the pitfalls of the trade itself by trying to get the linguistic side of it handled in-house by staff who aren't trained linguists.
It might look like an unnecessary cost increase at first glance, but I'd always recommend using language professionals for financial translation, the risk you run without them is sure to cost you much more in the end.
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