Market Reform Ideologies

Ideological debates that lack context during a financial crisis are like a bikini, says Marc Lackritz of the Financial Times: “What they reveal is suggestive; but what they conceal is vital.” “The conservatives are right that regulation sometimes creates flawed incentives. But their opponents — a group that now includes pragmatists who once resided in the conservative camp — are right that such moral hazard is to be anticipated and designed around. Just as we do not want to undermine optimal economic outcomes, neither should we reward the free-market zealots with any additional attention. As Ben Bernanke, a convert to pragmatism, famously observed in the midst of the meltdown: ‘There are no ideologues in financial crises.’ Nor should there be in Wall Street reform.”