He Was a Man of System

(Don Boudreaux)

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Here’s a letter to the Wall Street Journal:

Editor:

You describe the late Felix Rohatyn as a Democrat who looked more favorably upon economic growth than do many of today’s Democrats (“Felix G. Rohatyn,” Dec. 24). Perhaps; the standard is quite low. But the case remains unclear. Mr. Rohatyn was dismayed that the creative destruction unleashed by the free market threatens the profitability of established industries. And so to protect these industries from competition, Mr. Rohatyn did more than promote (as you put it) “spending on public infrastructure”: he wished also to resurrect the Reconstruction Finance Corporation – a scheme of government allocation of resources that Elizabeth Warren and many other Democrats today would surely warmly embrace.

Also, Mr. Rohatyn’s skill in rescuing New York City from its 1970s financial straits were not remarkable. The bonds issued by the Rohatyn-led state-level Municipal Assistance Corporation were, as my late colleague Don Lavoie explained in 1985, “sold only when the federal government agreed to offer over a billion dollars in loan guarantees and other forms of support…. Rohatyn was able to save the city by spreading its burdens to state and national taxpayers.”*

Felix Rohatyn was a friend neither of taxpayers nor of the innovative market competition that alone delivers real, robust, and widespread economic growth.

Sincerely,

Donald J. Boudreaux

Professor of Economics

and

Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center

George Mason University

Fairfax, VA  22030

* Don Lavoie, National Economic Planning: What Is Left? (Washington: Cato Institute, 1985), pages 191-192.