"Unregulated finance, the ideology of unfettered free markets, and state capture by corporate interests are what ended up undermining democracy both in North America and in Europe. All industrialized countries are at risk, but it’s the eurozone – with its vulnerable structures – that points most clearly to our potentially unpleasant collective futures."

The Road To Economic Serfdom - posted today by Peter Boone and Simon Johnson

I don't follow the reasoning here--ideology and big banks caused western democracies to overborrow and spend to the point of threatening the solvency of their regimes? Sure, it's the banks' fault for glibly lending but this isn't exactly the cornerstone of an argument that the states are the grownups here that should be given more power to regulate finance. Not that there isn't an argument to be made for that but this isn't it.

Isn’t the root cause of the problem the combination of democratically-elected governments eager to please, voting populations largely ignorant of the mechanisms and limits of bond-financed spending, combined with (i) growing surplus labor forces that are in need of government support and (ii) political cycles that are too short to impose any long-term accountability on the tax and spend regimes? I see how unregulated TBTF financiers helped governments hide or obscure their true financial situations but without the underlying tendency to spend more than is received I don’t see big finance as the driver of that demand. Also, in the case of the US, isn’t defense spending, not social welfare, the elephant in the room? I and others are getting tired of defense’s free pass –see e.g. Grayson’s recent “the war is making you poor” act.