NAMA and Friedman

Apr 13th, 2010 | By | Category: Ireland

The National Asset Management Agency is already in trouble, “NAMA revises loan performance figures downwards” reports RTE this evening. (RTE actually spell ‘performance’ without the second ‘r’; perhaps misspelling is appropriate in a sentence that defines tens of billion of Euro of liabilities as ‘assets’).

Were Ireland a capitalist economy, and not a gombeen one, governed in the interests of speculators, NAMA would never exist.  NAMA would not have been contemplated in the late 20th Century capitalism of the late Milton Friedman and the neo-liberals.

Friedman was the patron saint of free market economics, the return to 19th Century laissez faire liberalism that was espoused by Margaret Thatcher on this side of the Atlantic and by Ronald Reagan on the other. Friedman provided the philosophy that has undergirded the globalisation of economics in the past generation.

I hated him in my student days. His 1962 book Capitalism and Freedom was one of the set texts during my first year at the London School of Economics. He had won the Nobel Prize for Economics three years previously and, as far as my economics tutor was concerned, to question his judgement was tantamount to heresy.

I re-read Capitalism and Freedom a few years ago. It was very different from the book I remembered. It was far more radical than anything that had actually occurred. I wonder then what Friedman had made of the walls of economic protection that the United States and the European Union had built around themselves. Had I had the time I would have gone looking for his reaction to the Common Market “food mountains” that were allowed to accumulate in the 1980s and the more recent tariff barriers erected to prevent imports from the developing world effectively competing in European markets.

Friedman really was a radical and I regretted that my teenage prejudice had blurred an appreciation of what he was saying. There was a genuine desire for individual freedom in his book and his vision of capitalism was not one of transnational corporations using every opportunity to exploit situations to extract maximum profit, but one where the full and free operation of the market allowed the maximum of individual freedom and the maximum of competition between companies.

The re-reading of the book was prompted by theological reflection on issues of globalisation.  Friedman’s economics astonishingly seemed the best guard against the human sinfulness that is otherwise manifested in institutions that pass laws to keep out the produce of the poor; that discriminate between people on the basis of the passport they carry; and that allow nations to be used for the furtherance of politician’s religious or ideological beliefs; though the tutor was not persuaded, and gave the essay only 62%.

Friedman would not have contemplated the rescuing of reckless bankers by billions of money taken from working people; he would have said the market should determine their fate.  Similarly, he would have argued that NAMA’s ‘assets’ were only worth what people would pay for them, and if no-one would pay anything for them then they were worth nothing.

Where are the capitalist voices calling for NAMA to be stopped and for the government to get off the backs of working people?

Friedman would have said let the market decide.  In Ireland, capitalist market forces are applied only to working people; when it comes  to the rich, there is an extraordinarily generous state socialism.  We shall never know what Friedman would have made of such an arrangement; the gombeens must think it wonderful.

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  1. Do you remember how they lectured those of us in the Mid-West who opposed Aer Lingus’s departure from Shannon?

    The government couldn’t interfere in the activities of a private company, we were told. Market forces should be allowed to decide.

  2. The humbug in this country is extraordinary – the current mantra is that the bond markets will not believe us unless we pay billions for fields and half-built properties. Last time I checked the bond markets they didn’t appear convinced: in the Eurozone, only Greece was paying more to borrow than Ireland, and we were paying half as much again to borrow as the Germans were. In the meantime, working people are told that they need to talk to lenders about their arrears. Humbug!

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