On the slow death of Libertarian financial principles

Finally, I ran into an essay today that seemed to confirm my suspicions about libertarianism. Libertarianism is dying a slow death and the current financial meltdown further cements this movement’s distorted world view. Many think it is fairly fashionable to state that they are libertarian - little realizing that the current economic meltdown was clearly facilitated by libertarian philosophies dressed up in a conservative costume.

I remember reading Fountainhead when I was in engineering school and naively thought that this philosophy might be just the answer to problems and inequalities that I saw growing up in India. On graduating and finding real jobs in the real world, I slowly came to realize that libertarian principles espoused by its cheerleader Ayn Rand (she seems to call it Objectivism - sounds polished, but similar principles), was nothing short of a collection of washed up, puerile ideas that sound great in an utopian world of ones imagination but has little basis in a real world peopled with actual human beings who bring with them feelings, emotions, pleasure and pain. It is now clear that the economic meltdown was precipitated by libertarian principles like 'self regulating financial markets', 'let the markets decide what is best for the public', 'the markets can't be wrong' and 'government is the problem, not the solution' (among the many such slogans that one hears). It is time to clear the decks and ensure that this flawed movement dies a speedy, much-needed death.

The best thing you can say about libertarians is that because their views derive from abstract theory, they tend to be highly principled and rigorous in their logic. Those outside of government at places like the Cato Institute and Reason magazine are just as consistent in their opposition to government bailouts as to the kind of regulation that might have prevented one from being necessary. "Let failed banks fail" is the purist line. This approach would deliver a wonderful lesson in personal responsibility, creating thousands of new jobs in the soup-kitchen and food-pantry industries.

The worst thing you can say about libertarians is that they are intellectually immature, frozen in the worldview many of them absorbed from reading Ayn Rand novels in high school. Like other ideologues, libertarians react to the world's failing to conform to their model by asking where the world went wrong. Their heroic view of capitalism makes it difficult for them to accept that markets can be irrational, misunderstand risk, and misallocate resources or that financial systems without vigorous government oversight and the capacity for pragmatic intervention constitute a recipe for disaster. They are bankrupt, and this time, there will be no bailout.