Dream On
by Richard C. Leone
We’re often still susceptible to the siren call of the markets, despite the costly lesson of believing in the “The wisdom of crowds,” “Dow 36000,” or the so-called “the risk-free premium.” We want these things to be true. Who wouldn’t want to live in a time of endless prosperity – in a world where all problems vanish as the magic of the market provides the plenty from which flows more jobs and goods? This yearning – this uncritical belief system – underpinned the conviction that the magic of markets could lead to wealth for all (see privatized Social Security), and the less regulation the better (see your daily newspaper, if you still have one).
In this sense, the Madoff melt down was a metaphor for the larger fallacy that we can all consistently beat the market (as in Lake Wobegon where the children are all “above average.”). A large number of cheerleaders for this notion (George Bush, Henry Paulson, Martin Feldstein, etc.) tried very hard to convince the nation that prosperity in the future was dependent on shifting more risk to wage earners.