Soros Bashes Free Market in USA Today Profile
The Father of Capitalism, Adam Smith, is probably turning over in his grave as we speak.
The day after the presumptive GOP presidential nominee, Sen. John McCain (R-Ariz.), perverted the definition of free market to advocate his global warming platform, along comes left-wing billionaire George Soros suggesting traditional free-market theory is flawed in the May 13 USA Today.
The profile by David J. Lynch touted Soros‚Äô ‚Äútheory of reflexivity,‚ÄĚ which asserts classic free market theory is flawed because it assumes everyone acts rationally ‚Äúto maximize their individual welfare or profits.‚ÄĚ
‚ÄúOf course, real life never matches up exactly with the theory's assumptions. But they represent, economists say, a useful way of making sense of a complex world,‚ÄĚ Lynch wrote.
‚ÄúTo Soros, the conventional approach is rubbish. Instead of a world of near-identical actors, coolly assessing their economic interests and acting with clear-eyed precision, he sees a world (and markets) governed by passion, bias and self-reinforcing errors. Because fallible human beings are both involved in, and trying to make sense of, this world, they inevitably make mistakes. Those mistakes then feed on themselves in ‚Äėreflexive‚Äô ways that, when taken to extremes, result in situations such as the now-deflating
Soros‚Äô claim demonstrates he has no confidence in free markets to be self-correcting. He wrote in The New Republic on Sept. 2, 2002, in an article ‚ÄúBusted; Why the markets can‚Äôt fix themselves,‚ÄĚ that ‚Äústronger government intervention‚ÄĚ is required in the marketplace.
‚ÄúIn the last two decades or so ‚Äď and particularly since the ‚Äė90s ‚Äď we have given financial markets too much free rein,‚ÄĚ Soros wrote. ‚ÄúWe have allowed corporations to maximize profits to the detriment of considerations like equality of opportunity, environmental protection, and maintenance of the social safety net. Professional standards have broken down, and conflicts of interest have proliferated. Correcting these deficiencies will require stronger government intervention.‚ÄĚ
According to Business & Media Institute advisor Don Luskin, Soros‚Äô ‚ÄúTheory of Reflexivity‚ÄĚ could be better explained as an effort manipulate economic and political events. He referred to Soros short-selling the British pound in 1992 after
‚ÄúSimply, ‚Äėreflexivity‚Äô says that financial markets can have impacts on the real world,‚ÄĚ Luskin wrote. ‚ÄúSo if you want to move the world, just move the markets.‚ÄĚ
According to the USA Today article, Soros says these financial times are the worst since the 1930s. Although economic indicators don‚Äôt show that, as pointed out by Lynch, Soros sees more bad times coming.
‚ÄúBut despite Soros‚Äô apocalyptic rhetoric, the Dow is hovering near 13,000 and unemployment is a relatively low 5%. Soros explains the disconnect with the tale of the man who falls off the
BMI advisor Gary Wolfram, an economist and professor at
‚ÄúIt is clear that we are not in a deep recession, and pretty clear we are not in a recession,‚ÄĚ Wolfram said in an e-mail to BMI. ‚ÄúWe definitely are in a slowdown, but employment remains at near full employment levels, there is some growth in GDP. ‚Ä¶ But remember, growth at 4 percent slowing to .5 percent may feel like growth at 2 percent slowing to -1 percent, so it may be easy to convince people we are in a recession. It is clear that asset prices have fallen, housing in particular, so people see their wealth declining and again are persuaded we are in a recession. Most people don‚Äôt recall the 1978-82 period very well so are used to expanding wealth and output.‚ÄĚ
To add insult to injury, Soros makes the ‚Äúsilly claim,‚ÄĚ as Luskin calls it, that you have to look back at presidency of Ronald Reagan, whose last day in office was on Jan. 20, 1989, nearly 20 years ago, to find the cause of the current housing crisis.
‚ÄúHe sees the subprime mortgage debacle as the signal event that unhinged both this decade's housing bubble and a 25-year-long ‚Äėsuper-bubble‚Äô that originated in the debt-laden policies of the Reagan administration,‚ÄĚ Lynch wrote.
The story also stated Soros is a target of Fox News commentator Bill O'Reilly and conservative Web sites such as freerepublic.com, which ‚Äúroutinely assail him as ‚Äėanti-American.‚Äô‚ÄĚ However, Soros brings a lot of that on himself for engaging radical left-wing causes.
According to a 2003 Cybercast News Service story, Soros has donated to America Coming Together, MoveOn.org and the Center for American Progress. But, the Lynch article described these endeavors as a concentration on ‚Äúphilanthropy.‚ÄĚ
‚ÄúSoros retired from full-time investing in 2000 and concentrated on philanthropy through a network of non-profit organizations he had established in the 1980s and his Open Society Institute,‚ÄĚ Lynch wrote.