Dr. Hsieh is not confusing anything. We do not have real free market capitalism, and that is the problem. The politicians over the years have legislated the free market into the slavery of laws that distort market signals and prevent free markets from functioning as efficiently as they should – freely! As for the inequalities in Russia and China, there are also similar inequalities in North Korea, that bastion of a worker’s paradise. They have their elites who are very wealthy but the rest of the people stay poor. There are elite at the top and the rest are the peons. “Poor” Americans are far wealthier than the poor in those countries. This is not because of “crony capitalism”, it is simply because of crooked politics, the collusion of politicians and business. All these factors distort the price signals sent to markets. It would be far less likely to happen if the politicians did not legislate it. For example, sub-primes never could have happened in the volume they did, if the politicians had not legislated ridiculously low interest rate loans to risky home buyers. Just as one cannot legislate criminals into being honest citizens, one cannot legislate economic equality…the world is not perfect, humans are not perfect, so why in the world anyone thinks that humans are smart enough to legislate us into a perfect world is beyond belief. The only economic equality comes when all are slaves except for a few elite…like the Russia, China and North Korea examples. The reason is that in order to reach economic equality, control must be exercised by men to make it happen. Do you really want to trust a politician to care about your well being? The only way that will happen is if you become the politician, and you will take care of your own interests, but most likely not mine, because you have no idea what my interests are.
