QotD: Basic economics

It's easy to shrug this kind of stuff off, especially with a (newly veto-tastic) former oilman in the White House, but all that will change six months from now, and the Democrats are rubbing their hands at the prospect of unified government. In the meantime, the air is only getting thicker — on both sides of the aisle — with Mahatir/Larouche levels of hostility toward those shadowy bankster types who make money without even manufacturing widgets or tilling the land.

Seriously, did we kick communism to the curb only to suddenly discover, centuries after the French, that a free market will attract (and benefit from!) suspiciously smart people in pinstriped suits who are using their money to — wait for it — make more money? "Speculators" provide crucial liquidity (which is marketese for "money with which to buy the stuff you want to sell"), and perform a valuable function in helping locate assets that are under- or over-valued. Even those nassty speculatorsses at the end of the real estate boom (the evil "flippers" mom told you about) did some good stuff: They allowed people to sell their houses at a tidy profit, and fixed up old properties in preparation for resales that maybe never came. Many gambled and won (as did the people who sold to them), many others gambled and lost (freeing up "winners" who will buy those properties at firesale prices). That's all kind of the point.

Matt Welch, "There Was Music in the Cafes at Night and Re-Regulation in the Air", Hit and Run, 2008-06-24