When economic problems appear, many reporters instinctively blame free markets. It doesn’t occur to them that government actions have consequences, and therefore might be to blame for financial troubles. They don’t even feel the need to mention that such arguments exist.

The latest example of this phenomenon is the economic collapse of Russia and much of Asia. Many reporters insist that the problem is investor reaction to the troubles created by bad government policies, not the bad policies themselves.

For example, Time magazine’s Eugene Linden, in an article for MSNBC.com titled "Free markets make flimsy shelters," argues, "When a lot of reasonable people take reasonable actions to protect themselves, the results can be anything but reasonable." The lesson of the financial debacle overseas is that "the integrated global market" is "inherently unstable," according to Linden. "Make no mistake: an unfettered global market is a dangerous gamble," he warns. "It can make nations rich, but the price tag is the omnipresent threat of economic and political volatility that could someday shake the system apart."

ABC"s Robert Krulwich, in a November 5 World News Tonight story, picked up on the same theme: "The problem is free markets have changed in the last 30 years; they’ve gotten freer." Krulwich told viewers that after many countries deregulated in the 1980s, "rich people everywhere could take some of their savings and send it abroad to join the other money looking around for other places to invest."

Computers then made it easier to move money speedily, he reported, and mutual funds added the investments of ordinary people to the world economy. Asia became a hot spot, but when investors became nervous, "then just as suddenly, the money left." According to Krulwich, "The problem [is that] President Clinton wants this big pile of money to move freely around the world, but he also wants it to move slowly and calmly. Nations and economists are talking now about putting controls on the movement of this money, so the President says, yes, money should be free, but even he is wondering: how much freedom can we afford?"

But both of these reports ignore the argument that the world has hardly had "an unfettered global market" recently. "The problem with the current system is that it is really a pseudo-system — a compromised system influenced more by political considerations than by the principles of private property and individual freedom," writes James A. Dorn in a Cato Institute report. "That is why we still have pegged exchange rates, discretionary government fiat monies, crony capitalism, and negotiated rather than free trade." According to Dorn, "It’s not market failure that has led to the chaos in global financial markets but government failure."

Neither Linden nor Krulwich made any mention of the role of the International Monetary Fund in causing investors to ignore risks, or the political manipulation of the value of money in Asia and Russia, or those countries’ rampant crony capitalism. Instead they blamed the usual suspect — liberty.

— Rich Noyes