Sunday, September 21, 2008

Hey Wall Street: Who's Your Daddy?

The professor in me has to start out with the point that our basic structure of popular economic theory, that there is a spectrum from "right" free-market ideologies to "left" socialist ideologies, is badly outdated and has been for some time. All of the large Far Eastern economies, for example, long ago ceased to be fixed on this spectrum. Nonetheless ironies abound as everyone reacts to the meltdown of some of the largest private investment firms and banks in North America. The central irony is that our thoroughly modern generation of positively feral free-marketeers, whose like had not been seen since the Gilded Age of the late 1800s, are now to be bailed out with taxpayer's dollars (700 billion dollars, raising the national debt from $10.6 trillion to $11.3 trillion).
This circumstance outrages leftists and rightists alike, from members of various socialist parties in Italy and Spain to John McCain, who argues that weathering the storm would result in a stronger dollar over the long term, a not-totally-unreasonable argument with the added benefit of lots of populist red meat.
The problem for the ultras of all stripes is not that anybody is willing to sacrifice themselves out of some misguided sense of fairness to Lehman Brothers, but almost everybody (McCain and not all Italian Communists excepted) thinks that letting Freddie Mac go down might do serious enough damage to the economic system itself that it's worth the money to prop it up. I'm not into drama; reading along as far as I can see there's a good chance that this financial evaporation ("evaporation" is more accurate than "meltdown," no?) won't in fact result in major institutional changes.
Here's the irony that I like best, though: It was the Bushies who wanted to effect radical institutional transformation. They wanted to get rid of Social Security altogether. One of the President's major initiatives (a failed one) was to urge Americans to privatize their retirement funds. Driving the federal government farther and farther into debt was seen as a way to weaken it. The ideological project was to reduce the federal government to a more minor player, with more power in private hands. The entry of many more middle-class, individual investors into the stock market, although over-stated by corporate boosters, was a significant movement that was a real victory for free-marketeers. However, years of Republican dominance in Washington chopped away at regulation and oversight - not an ad hominem charge on my part but simply what conservatives proudly proclaim to be their agenda - resulting in the present train-wreck (more fun word than either evaporation or meltdown), and the final upshot looks to be that the hated "State" will end up as major shareholder, no doubt cooperating with the non-rich shareholders that have been treated like fodder by the Bushies and their corporatist supporters. That, in other words, is the apparent accomplishment of George W. Bush: the exact opposite of what he set out to achieve.

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