Does the Financial Crisis Discredit Libertarianism? Round II:

Arianna Huffington has a widely circulated op ed claiming that the current economic crisis discredits free markets. She provides very little in the way of evidence. There isn't much here that wasn't aired in Jacob Weisberg's similar piece back in October. So I refer interested readers to my rebuttal to Weisberg in this post. Huffington even imitates Weisberg's comparison between free market advocates and communists. This, I suppose, is the economic policy debate equivalent of comparing the Israelis to the Nazis and is about equally edifying.

Huffington also cites the recent New York Times article claiming that the crisis was caused in part by the Bush Administration's supposed commitment to free markets. I'm not going to analyze the article in detail here. However, I will note that it also emphasizes that the Bush administration engaged in considerable government intervention incentivizing financial institutions to issue mortgages to poorly qualified homebuyers as part of its policy of promoting homeownership. As the article puts it:

Mr. Bush had to, in his words, “use the mighty muscle of the federal government” to meet his goal. He proposed affordable housing tax incentives. He insisted that Fannie Mae and Freddie Mac meet ambitious new goals for low-income lending.

"Us[ing] the mighty muscle of the federal government" doesn't exactly sound like laissez-faire to me.

More generally, the notion that the Bush Administration had any serious commitment to free markets is laughable in light of the fact that it created the largest new government program in decades (the 2003 Medicare prescription drug bill), presided over the greatest expansion of government spending since the 1960s, and massively increased regulatory spending as well.