The Lionization of the Free Market: "But at some point, this game has to stop":

In an interview with Ezra Klein, the Director of the Institute for New Economic Thinking Robert Jackson makes the above quote. He also expands on a basic argument that our financial and political structure is institutionally biased towards creditors (e.g. banks) rather than debtors. In short, that "our politics, our lawmaking institutions, are set up to disproportionately represent people who have money." (Bold mine - JMG)

What Jackson sees as a functional result is that:

when given the choice between forcing Greek citizens through the grinder of austerity or attempting a debt restructuring that can unleash unknowable consequences in the credit default swap market or the relations between large banks, to choose austerity. They don’t understand what kind of collateral damage will be done when you resort to restructuring rather than imposing more austerity.

Those that will suffer under their government's austerity (and people will suffer, that point is elided by far too much) are underrepresented in government relative to the people who would suffer under Greek debt restructuring.

The important point I mean to make with this, is that political structure and market structure are mutually re-enforcing institutions that are shaped-at least in part-by political choices. I say this point is important, because in the process of lionizing the free market that political representatives often engage in, we lose sight of the actual complexities of markets themselves.

The basis for the appeal the "free market" has as a political slogan is rooted in an oversimplification of the idea. The internal logic is that market outcomes are must be by definition just, since the patterns of the market are inherently non-coercive. This leads all kinds of silly post hoc rationalizations for unseemly conduct because; if patterns of a free market only produces just outcomes, then the outcomes of the free market can only be just. (For an example of the genre, read Michael Levin's defense of Ebeneezer Scrooge.)

What this kind of simplistic exhalation of the market ignores is the very real dynamics of how political and cultural institutions influence the market itself (and how the markets influence those institutions). The government of Greece is much more willing to push for austerity in part because those that would suffer more under austerity are underrepresented relative to those who would suffer more under debt restructuring. To seek to understand these dynamics is the accept the fact that economic outcomes does not always occur in a vacuum of political influence, that markets are shaped many factors, and that the justice of those factors is not always clear.