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Liberty in Books: The Financial Crisis and the Free Market Cure

MAY 14, 2013 by JOHN A. ALLISON

The primary cause for the 2008-09 financial crisis, and for our ongoing economic woes, is government policy. Financial services is the most regulated industry in the world. As a result, the industry has performed poorly. Government regulations created incentives for massive misinvestment. When the "bubble" burst, millions of jobs were destroyed and tremendous wealth evaporated.

Mr. Allison claims that the fundamental cause of the financial crisis is not economic but philosophical. The cure is also philosophical. 

ABOUT

JOHN A. ALLISON

John Allison is the President and CEO of the Cato Institute. Prior to joining Cato, he was Chairman and CEO of BB&T Corporation, the 10th largest financial services holding company headquartered in the United States.

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Unfortunately, educating people about phenomena that are counterintuitive, not-so-easy to remember, and suggest our individual lack of human control (for starters) can seem like an uphill battle in the war of ideas. So we sally forth into a kind of wilderness, an economic fairyland. We are myth busters in a world where people crave myths more than reality. Why do they so readily embrace untruth? Primarily because the immediate costs of doing so are so low and the psychic benefits are so high.
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