This is the Cato Daily Podcast for Tuesday, December 2nd, 2008. I'm Caleb Brown.

For libertarians, Russell Roberts says it's an important time to think about first principles,

given the financial crisis, a recession and the government's

response, he predicts a United States in which there is a lot more top-downing than bottom-uping

in the economy. His new book, The Price of Everything, A Parable of Possibility

and Prosperity, explores what is seen and unseen within our prosperity and the politics that

surround economic reality.

We spoke following a forum for the book yesterday.

Where are people being misled the most?

What insight is most missing from the current public talk about

finance the economy and the government's proper role in it?

Well one of the narratives that's emerged in the current mess is that this whole thing was

Wall Street's fault, it was greed run amuck, government didn't do its job regulating Wall Street. And my worry is that

we're going to try to create a new financial order from the top down, which is going to be extremely

difficult to do well without unintended consequences.

This problem was not caused by deregulation.

You can always argue we should have regulated more and it's always a

possibility that some regulation could have been put in place ex ante that might

have saved us from this meltdown.

So I think there's always going to be this tendency to try to figure out what that might have been.

And we'll try to prevent the next crisis that was like this one, which will probably be able to do.

What we won't see is the unobserved costs of those kind of solutions.

...