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Viewpoints on the 'free market'

October 15, 2008

Re "Ideology takes a back seat in bank strategy," Oct. 12

The Times alludes to the government's bailout of the financial system and questions whether we are "witnessing the erosion of capitalism."

Capitalism is an economic system based on unregulated free markets, private ownership and open competition. These, however, have been absent from the U.S. economy for well over a century. Mortgage monopolies Fannie Mae and Freddie Mac were created and backed by the government in order to bolster homeownership, thus spawning America's insatiable demand for housing. Congress enacted laws such as the Community Reinvestment Act, punishing lenders who refused to make loans to high-risk borrowers. And the Federal Reserve manipulated interest rates to artificial lows that served as the catalyst to an unsustainable housing bubble.

What we are witnessing today is the inevitable result of an intrusive government. We don't need a bailout, we need a separation of state and economics. We need laissez-faire capitalism.

Brady Cuthbert

Irvine

The Times reports that ideology is taking a back seat in Treasury Secretary Henry M. Paulson's economic rescue plans, but the reporting reveals the opposite. If Americans are purchasing stakes in companies, why shouldn't we get a say in how they're run? Why should our ability to exercise the same rights as other owners be curtailed just because a bunch of conservative economists put their ideology ahead of what's best for the American people?

For too long we have been held back by this ideological opposition to what works -- on healthcare, on energy, on education and more -- and the entire society has suffered as a result. The fact is that government has always had an important role in the so-called free market, spurring research and development through subsidies and tax breaks and stepping in when markets fail. Those who oppose government taking a more formal role in economic institutions because they think it is contrary to free-market principles are living in a fantasy world.

Maybe the threat of the system's collapse will snap them out of it so the U.S. can follow the rest of the world and take a more rational approach.

Mark J. Kaswan

Sherman Oaks

Commentators may have failed to note the irony of concerns about the heavy hand of bureaucracy if there should be nationalization of the banking industry.

There are no grounds for such concerns, given our nation's unwavering support of the capitalistic system. But given the choice, I'd rather have an incompetent bureaucrat in charge of the banking industry than an incompetent banker whose interests are dominated by greed and self-interest.

Leon Cooper

Malibu

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