I believe in market economics. But to paraphrase Churchill – who said this about democracy and political regimes – a market economy might be the worst economic regime available, apart from the alternatives. I believe that people react to incentives, that incentives matter, and that prices reflect the way things should be allocated. But I also believe that market economies sometimes have market failures, and when these occur, there’s a role for prudential – not excessive – regulation of the financial system.
