Iceland is a microcosm of the excesses of capitalism.

The story of Iceland's fall from Euro-Econo-Powerhouse to a country on the brink in such a short span of time should be instructive for those who advocate unfettered economic growth.

When the primary driver of an economy is unrestricted growth fueled by capitalism's only motivator, greed, then boom and bust cycles are the natural consequence.

Here's why I think unfettered growth is a problem for capitalism:

1) Growth is great when there is an unlimited potential.

2) When the potential reaches limits, then the contraction of the economy creates significant, broad-scale, economic disruptions.

Why do those issues create a problem for capitalism?

Issue number 1 is a fantasy. It is more wishful thinking than reality because unlimited potential is a myth. In essence, it sets people up for failure.

Issue number 2 sets the stage for socialism. Socialism is not always bad, it helps people weather a storm, but it can stifle future capitalistic development.

I've said all the above to say this: For capitalism to prosper and provide its fruits, then it must be tempered with some government oversight.

Government oversight is really the only way the public can put brakes on exploitation and the ever-present boom and bust cycles that unfettered capitalism brings.

We're now seeing a correction in the excesses of capitalism. It's not that capitalism is bad or wrong, just that too much of anything without some adult supervision results in imbalance.

Beware of the dark side of capitaism: Corporatism

Stories like this one underscore why privatization is not the cure-all its proponents claim.

I'll be the first to admit that capitalism is a great system. When it's doing what it does best, it's incomparable.

But, as with all isms it carries the seeds of its own failures within its strengths.

Private companies that seek government contracts resort to scratching the back of public officials, and if they're lucky, they may get a president who supports their efforts with no bid contracts.

The upshot is this: When private companies gain government favor without the necessary competition of the marketplace, then we get a system not unlike that of the Third Reich---corporatism. A corporatist state is one where corporate interests become one and the same with the state and mutual backscratching for business is the norm rather than the exception. Here's a lengthy definition of corporatism.

Privatization of government functions is, to be punny, tricky business. Some government functions should never be privatized because they involve such heavy policy matters that direct government oversight is necessary to insure that the sovereign (read: the people) has a say.

Capitalism is great, but when business seeks favor through patronage rather than through competition, then we're not dealing with capitalism anymore---it becomes corporativism. That's nothing more than a polite way to say fascism.