In financial markets, this phenomenon can cause herd behavior, which in turn can cause bubbles and panics. Let s admit that all this is true. When a market trend begins to look precarious and unsustainable, there are enormous incentives namely, the prospect of making a killing to buck that trend and bring it down. Representative democracy seems to be less successful in this respect. But democracy seems incapable of correcting its own excesses.
Simple realism is all that s required.
Meanwhile, it is the continued recourse to government interference which requires blind faith that somehow, this time, it will succeed. Brink Lindsey is director of the Center for Trade Policy Studies at the Cato Institute. .