I have been traveling for several weeks and have thus not had much time to compose proper responses to the amazing developments in the election and our economy.
In little more than a week, Obama has overcome the post-Palin “bump” to secure a five point lead over McCain. All indicators suggest that he is going to win this election–do we owe Kos an apology for doubting his all-knowingness?–though these indicators may prove illusory. I find it remarkable how much my mood has been pegged to the polling numbers. The prospect of a McCain-Palin administration is so horribly unpalatable to me that any indication of the ticket’s strength hits me in the gut. Why he has lost his post-convention and post-Palin bump is something of a mystery to me. Are voters so fickle-minded that they abandoned Obama in droves only to change their minds less than a week later? What’s so hard about choosing between the candidates? Their positions on a host of issues are crystal clear, it seems to me, even if our media has no interest at all in covering these differences, except in the most superficial way.
One explanation for the shift is that the meltdown of our financial system has punched through the bullshit of personality-based politics. The economy has been traditionally strong turf for Democrats, with some justification. Fortunately for Obama, McCain has backed himself into all sorts of rhetorical corner w/r/t the economy. Gaffe after gaffe–the economy is “fundamentally strong,” etc.–re: which the Obama campaign has rightly hit him hard. The fact is, the Republican hatred of regulation and government is, as far as I can tell, partly what has caused the present financial crisis, though I am open to evidence making the opposite case, or laying some of the blame w/ the Clinton administration. Whatever the causes of the crisis we should note with some interest that when the chips are down our present Republican administration has proven itself to be more interventionist and statist than a Democratic administration would ever be allowed to be.
A Democratic administration that nationalized (or as Paul Krugman put it de-privatized) Fannie Mae would be regarded as well nigh crypto-communist. A trillion dollar purchase of bad debt from the private financial sector using our tax dollars would be held up as evidence of liberalism’s love of “big government” and the nasty “nanny state.” Always remember, ye true-hearted libertarians, no Republican with any proximity to real power (ignoring the blogging blowhards and talk radio types) actually believes in non-intervention by government, either in principle or in practice. No one except maybe Ron Paul, who has the virtue of consistency, though the consequences of Paulite economic policies would be a terrible disaster for the American people; a President Ron Paul would be non-interventionist for about thirty seconds before those who hold real power in this country forced him to spend our tax dollars in exactly the same way that President George W. Bush is spending them. Talk of the menace of “big government,” from Reagan on, is only a sort of rhetorical bludgeon Republicans use to crush Democrats in elections and to destroy much-hated social welfare programs. We live in a country that demands market discipline of its poor, but lavishes massive taxpayer subsidies and bailouts to those sectors of the economy that “cannot be allowed to fail,” though said sectors are allowed to do whatever they want, unsupervised, up to the point of their failure.
To be clear, I don’t think these bailouts are a bad idea. They may be necessary to prevent our present liquidity crisis from going nuclear. We need an economy with a functional financial system. But these government bailouts are a sort of emergency-room economics. What we need is an economics of preventative medicine. What needs to be regulated isn’t some big mystery, as far as I can tell. No regular reader of Krugman’s NYT columns, which expounded on the housing bubble at significant length before it collapsed, could honestly claim so. What is more odious to me is the hypocrisy at work in Republican paeans to small government, and the sometimes reflexive desire of liberals to defend themselves against such attacks by preemptively saying how much they love the free market and how capitalism is the only true path to national virtue and prosperity.
Liberals should be unashamed to repeat the following mantra: the free market is a disaster, for us and for other countries. Not even Republicans, it should now be obvious, trust the free market. The economic success of the US since the end of the Second World War is a testament to the power of planned economies that couple direct government investment and protectionist industrial development policies and welfare safety nets to tightly regulated markets. This is, it should go without saying, not a synonym for centrally-planned command economies where the government decides how many tubes of toothpaste will be manufactured in a particular year.
So: the free market is a disaster.
And: government is (sometimes) the solution to our economic problems.
Now everybody–
Well said! It seems to me that Republicans make all sorts of promises, but (generally speaking) the only promises they feel compelled to keep are the promises they make to the corporate community, because big business is the only constituency within the Republican Party that might bolt if Republicans don’t keep their promises (with the possible exception of the Christian Right). So Republicans promise smaller government and spending reductions but then utterly abandon their promises; they promise a “humble” foreign policy and then reneg on that — but when Bush was elected, he immediately made good on promises to cut taxes in ways that benefit the corporate community most especially. That’s why Republicans can turn on a dime and support huge government bailouts — bailouts that would indeed inspire cries of “socialist” and even “communist” if they came from Dems — because if big business wants bailouts, then bailouts is what Republicans are obligated to provide.
Big business does not care about the size of government, and big business is happy to accept government intervention if it saves big business’ ass. All big business wants is lower taxes to fuel short-term profits and share value.
Big business may supply the money that fuels the Republican Party, but middle class Americans supply the votes — and the confounding way a good number of these folks seem to shift back and forth suggests they are either “low-information” voters, or else they care about issues other than the candidates’ policy proposals.
Maybe this crisis will have an impact in terms of convincing these people that Republican policies aren’t serving their interests…
Comment by Ian — September 20, 2008 @ 11:08 am
You write, “Liberals should be unashamed to repeat the following mantra: the free market is a disaster, for us and for other countries. Not even Republicans, it should now be obvious, trust the free market.”
I agree with the principal of this but, I’d like to make the case that there is no actual notion of a free market. Or what is usually referred to as the ‘free market’ isn’t actually a free market. After all, where does that notion begin? Is it a natural phenomena like gravity? What is the purest free market of all? Wouldn’t it be no rules, no regulations at all?
It seems to me, what we call the ‘free market,’ is actually a huge, complicated, construction of rules, laws, mores, etc. spanning the course of human history.
And there are tremendous laws, regulations, infrastructure, etc. put into place, over time, which compose the marketplace of today. The idea that the ‘free market’ is this magical efficiency apparatus seems like a chimera. To me, it’s clearly a construction.
So when people talk about the ‘free market’ it seems to me that they’re really talking about a complicated arrangement rules, regulations, etc. for competing to produce/sell something. And the idea that, ‘if we just get out of the way of the free market, it will work it’s magic’ is utterly delusional. All you’re really talking about is a system of competition, which upon closer and closer inspection is unbelievably regulated, legislated, constrained and defined.
So when people talk about a ‘free market’ they’re just talking about a different arrangement for competition that has nothing to do with a market being ‘free’ – ‘free market’ is just a convenient buzzword.
Now, the idea that additional rules somehow inherently stifle or kill competition seems similarly naive. Sure, they could but, they could also keep it healthy and stable. And I think the trend over the last 30 years has been to consciously deny American Economic History. In point of fact, the US economy after the civil war was one boom-bust cycle after another (just search on ‘panic of’ in wikipedia and you’ll see what I’m referring to). Establishment of the federal reserve ended this cycle. Indeed, the increased regulation during the first half of the 20th century, laid the ground for the largest economic expansion in our history. So, Imposing regulations to cap foolish risk taking is a Good Thing, not just for the economy but, for society. I would even go so far to say that the idea that we would ’stifle innovation’ now by imposing regulations that force caps on foolish risk takers, is historically false.
This is all rather inchoate in my mind and this was a stab at trying to organize my thoughts – sorry if it’s too abstract or senseless.
Comment by aaron — September 20, 2008 @ 2:28 pm
Two responses come to mind. First, you’re right. The whole notion of the free market is very troublesome and shot through with contradictions. In a sense, the free market is, as I suggested, an ideological weapon used for cynical political purposes by both major parties.
Then again, the ideal of the free market is easy enough to describe and easy enough to find historical examples of, if not through an entire economy then through certain sectors of it. No pure free market exists, but a market that is allowed to do what it wants absent regulation (apart from the enforcement of contracts) is more “free” according to the standard definitions than one where government shapes the behavior of the market.
Which is to say, there is often a policy option between “more freedom” and “more regulation,” less intervention and more intervention. I am arguing that “more freedom,” as defined by your run-of-the-mill libertarian, has historically — and for those interested, also theoretically — been a disaster. Times where the US economy has approximated something like a free market have been totally disastrous for the people. Our current financial meltdown is arguably the result of “too much freedom” in the markets.
Democrats should always choose the way of smart, efficient regulation, reflective of democratic consensus and consonant with our enumerated rights. Republicans should, too, if they care about the economic welfare of the American people.
Comment by Lee — September 20, 2008 @ 5:46 pm
To Lee and Aaron: I don’t disagree with most of what you’ve written above, but it is important to keep in mind the way most Americans hear the words: free market. They hear a version of the American dream: that we live in a country where if somebody has an idea and a willingness to work — in other words, if somebody has the wherewithal to create a business that can make money because people are freely willing to pay for whatever goods or services the business offers — then that person can create that business and succeed and become wealthy. This, people say, is the engine that drives America’s prosperity.
We can argue about what rules and regulations are required to protect Americans from excesses, but you can’t deny that people are contributing to our economy by turning ideas into businesses in the private sector — just look at Bill Gates. (I know, I know, public investment in technology, especially by the defense department, has played a major role — I’m just saying entrepreneurs also deserve some credit for providing jobs, our standard of living, etc.)
So when you say there is no free market, or when you say negative things about the free market (i.e. “it’s a disaster”) — that WILL be misinterpreted by some people to mean that you think the government should just run everything, as in the “centrally planned command economy” Lee refers to.
Now may be that once-in-a-lifetime moment in American history when most Americans are prepared to swallow major changes in the way government manages the economy. I just hope we don’t blow the opportunity by using language that may be technically accurate but can be easily misunderstood.
Comment by Ian — September 20, 2008 @ 6:57 pm
The regulations of the market about which you are speaking are those that would level the playing field and create fairer competition. So of course, the Republicans should choose these regulations if they care about the economic welfare of the American people. But isn’t the fundamental problem that Republicans ultimately do not care about others’ well-being as long as they’ve got theirs? Seems inherent to the ideology. Liberals will never win the argument for Republicans to care about the other guy. This is the crux of the problem, and, seems to me, unsolvable.
Comment by stephanie — September 20, 2008 @ 8:23 pm
Politically, I disagree with the argument that the funamental problems is that Republicans do not care about others’ well-being as long as they are ok. Even if we grant the idea that Republicans do not care about others but only themselves, we have to ask ourselves why millions of middle-class Republican Americans support Republican ideas even though these ideas hurt them just as much as they hurt Democrats.
Comment by Ian — September 20, 2008 @ 8:38 pm