Keeping Markets Honest

American Prospect by Robert B. Reich | Aug. 24, 2007 (Opinion)

A basic free market principle is that when consumers cannot differentiate between risky products and good products, they?ll withdraw from the market. That's what sub-prime mortgage investors are doing now.

A basic free market principle is that when consumers cannot differentiate between risky products and good products, they'll withdraw from the market, which is what's happening to China's consumer exports. China's responsible exporters are suffering because irresponsible ones have cut corners to make fatter profits, and global consumers can't tell the difference. So the challenge for China is to rein in its rip-roaring free-market capitalists with ... Full Story »

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Related Comments: Global Economy (2)

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by Marty Heyman - Oct. 1, 2008

Reich keeps it simple and focuses on "risk" and disclosure but turns, in the end, to government regulation as if it could predict what it should have regulated. It will/should be lambasted as prototypical progressive thinking. How was the Chinese government to know that its industries were using lead paint or poisonous substances in food products? It's easy to demand regulations now. But what will be the next thing they should have regulated ... or the US? In fact, when the Federal Reserve started the process with incredibly low interest rates to stimulate the economy. Would the government have regulated Greenspan?

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