Eliot Spitzer Nails It...

...and I am not talking about his hooker, Ashley Dupree. Spitzer writes:

Although everybody claims to love the market, nobody really likes the rough-and-tumble of competition that produces the essential "creative destruction" of capitalism. At bottom, this abhorrence of competition and change are the common theme that binds together the near death of the American car industry, the collapse of the credit market, the implosion of the housing market, the SEC's disastrous negligence, the Madoff Ponzi scheme, and the other economic catastrophes of recent months.

Consider the examples of the SEC and GM, which would appear to have nothing to do with each other. The traditional critiques of the SEC have been that it was underfunded and didn't have up-to-date laws needed to regulate sophisticated financial transactions in evolving markets. That's not accurate. The SEC is a gargantuan bureaucracy of 3,500 employees and a budget of $900 million—vast compared with the offices that actually did ferret out fraud in the marketplace. And the general investigative powers of the SEC are so broad that it needs no additional statutory power to delve into virtually any market activity that it suspects is improper, fraudulent, or deceptive. After each business scandal (Enron, Wall Street analysts, Madoff …), the SEC claims a need for more money and statutory power, yet those don't help. The SEC has all the money and people and laws it needs. For ideological reasons, it just didn't want to do its job, and on the rare occasions when it did, it didn't know how.

GM's excuses—that its UAW contract and health care costs make it too top heavy to compete—are partially true but ignore a simple reality: These are the self-inflicted wounds of a company that chose a path of least resistance rather than confront the need for dynamism and innovation. GM and its brethren forged a partnership with the UAW that avoided difficult choices on legacy costs, because the world seemed to permit it. Similarly, they opposed meaningful reform in health care. While this approach may have been tolerable in the '50s and '60s, it made no sense over the past 30 years. The auto industry preferred protection to competition. And when it had to compete, it wasn't up to the task...

Of course, in the end, Spitzer being Spitzer, can't be faithful to his free market theme and jumps in bed with the whore institutions that don't do honest work:

We must rebuild these two institutions. If we don't infuse them with a culture of change and love of competition, they will fail once again. The SEC should go out and hire some of the young, recently laid-off traders from hedge funds and investment banks. They need work, and better than any group of lawyers or agent-investigators, they know what trading patterns and practices to examine and where to drop subpoenas to find the skeletons. The SEC should welcome the creative tension that results from having state regulators or other federal agencies such as the CFTC on the beat. And GM should use government funding for green technology to truly transform itself: It should build the infrastructure for plug-in technology that will be the next iteration of "gas stations."

Disgusting. The government agencies, the SEC and CFTC, should be abolished. GM should be allowed to sink or swim. That's what free markets are about.The problems at SEC and CFTC are not the personnel at the agencies, but their designated task of controlling markets. As Hayek warned, the evil will always circle such agencies--and not for the good.