In libertarian circles, Jacob Weisberg's recent Slate column, which blames the financial mess on free markets, has been ruffling feathers. Really, you need to read it if you haven't already. (And even if you have read it, it might wake you up this Monday morning to read it again.)

I had toyed with writing a response, but it seemed too difficult. Weisberg doesn't really have an argument, besides the analogy of Marxists who deny that the fall of the USSR has anything to do with their worldview. In particular, Weisberg doesn't point to this particular deregulation or that, and explain why these changes caused the housing bubble to occur when it did. No, he just asserts that a sufficiently regulated market wouldn't have gotten into such a pickle.

As so often happens in these matters, Anthony Gregory has ended my anxiety, by writing a column as good as I would have. (Possibly better, but let's not explore that possibility.) My favorite part--and what really bothers me so much about this "it's the fault of the free market" BS:

Anyone under fifty who went to public school probably remembers this lesson: We used to have laissez-faire, and it caused great inequality, poor working conditions and bank panics, so we had the Progressive Era and the creation of the Federal Reserve. But we still had too much economic liberty and it (not the Federal Reserve) brought on a Stock Market bubble that burst in 1929, so we had the New Deal, the FDIC, national economic planning and the like. While that didn’t quite end the Depression then (perhaps World War II did?), it did guarantee that we would never have one again. Thanks to government interventions from Teddy and Franklin Roosevelt to Lyndon Johnson, our modern economy will never have the troubles it did in the 1930s. Central banking and millions of pages of federal regulation keep this economy afloat and comfortably growing.

Now all of a sudden the statists claim we are having the same kinds of troubles, and once again it’s all the free market’s fault – the same free market they said no longer exists, due to decades of intervention. It’s the freedom to buy and sell, to contract with one another, to exchange within a framework of free association, free pricing and property rights that has, once again, brought on economic calamity. Not the century of interventions that they said have guaranteed no such catastrophe would ever again happen. No, the remaining pockets of liberty are at fault.

Anthony really nailed it there. In 2003, if you had proposed abolishing the SEC, Jacob Weisberg would have soiled himself. "Are you nuts?! We can't have a completely unregulated market!! Imagine how leveraged everybody would be! Don't you remember, that's what caused the Great Depression!"

You see the point? We don't get to have liberty, because it would supposedly usher in a depression. And yet then when the heavily regulated system spits out another depression (we are warned, in any event), this is taken as confirmation that liberty causes depressions.

Incidentally, the above musings haven't proven that free markets are good. If I were advising the Moscow government back in 1983, and they said, "Let's abolish money," I would have said--after putting down my Star Wars toys--"No guys, remember what happened when Lenin tried that? Don't destroy the last vestiges of freedom or your people will starve!"

And then when the USSR collapsed, a die hard Marxist could have said, "Jeez you capitalist pig, you warned us that pure socialism would lead to collapse, so we compromised. And look what happened!!"

Fortunately, Anthony deals with this matter too, i.e. he explains the primacy of theory when it comes to evaluating social systems.