Courtesy of Economist’s View, this Tom Tomorrow piece on what happens when you let exotic new instruments grow rapidly: unexpected consequences.
While Tom Tomorrow is a Leftist, here he is making a conservative case: what happens when we create a new institution and rapidly expand it? What are the social consequences.
Of course, we “do not know” until a disaster occurs. Then we know to well.
There was a conservative case to be made against the rapid expansion of mortage-backed securities. Likewise, there is a conservative case to be made against things such as homosexual marriage laws. These are new things we do not know the consequences of.
On one side are libertarians, who say, “You can only stop these contracts through violence, and the first rule of civilized society is never to initiate violence.”
On the other side are conservatives, who say, “The state exists to protect against against the chaos of nature. We are at war with uncertainty, becauese bad choices can lead lost lives of innocent people who were caught up in your innovations.”