Many may be surprised that George Soros, an enthusiastic and highly visible player in global markets, speaks of a need to regulate global capital markets. Yet his utterances suggest that he does not truly understand how markets work.
In short, Mr Soros and others of his ilk may have considerable insights into running their businesses and appreciate the importance of political manoeuvring. However, the conceptual elements of the functioning of markets seem to escape him.
In providing his interpretation of contemporary problems, Mr Soros invites the revival of outmoded notions of control over international capital flows. Unfortunately, the record of failures from controlling capital flows is predictable, repetitive, and often catastrophic.
What is missed in these arguments is that if the market is the problem rather than the solution to our woes, then we must blame ourselves. Market outcomes are merely a summation of the actions arising from the decisions we make every day. A full understanding of the market indicates that if there is an enemy, it is us.
While some describe market outcomes as though they arise from a conspiracy concocted on Wall Street, it is more accurate to describe them as arising from choices made on Main Street. Certainly, the choices of mutual fund managers and bond dealers are more prominent and better chronicled. However, these self-important movers and shakers cannot begin to match the power of the faceless masses. Power in competitive markets will always be limited, ultimately by the refusal of consumers to pay higher prices for their perceptions of lower quality products or when their preferences shift without warning.
Unfortunately, it is difficult to make sense of the market in the context of the ongoing debate that has demonised the market. Despite having weathered the withering criticisms of and the real world experiments with communism, the market economy remains under assault, this time from within. Many critiques of the market are deemed credible even though university students could debunk most anti-market hype after their first week in an economics course.
Mr Soros' gesture for regulating capital markets may appear to be motivated by charity and public spirit. However, consider how his considerable personal fortune was made. His most visible success was in outmanoeuvring Bank of England bureaucrats hobbled by unsustainable policies that were opposing market trends. This was a no-brainer that only required access to piles of money to place a bet in a casino where all gamblers were sure winners. So it is not so surprising that Mr Soros promotes interventions to provide him more opportunities to earn huge payoffs by outmanoeuvring government agencies that gamble with taxpayers' money.