Wednesday, March 04, 2009
During our current crisis we are not yet moving in a full blown socialist direction as traditionally understood. Instead, we are moving toward some sort of mixed ownership form, where resources are retained in some private hands, but also the public hand is deep in control. Such is the fate of our banking industry. Washington Post headline today reads: US Clears Path to Bank Takeovers -- Obama's revised plan for industry aid could result in nationalization. Listening to CNN this morning, I heard how this is really our only way out of the mess we are in. Supposedly, those watching are told, the Bush team pursued the "let the market correct the problem" approach and that has resulted in our current mess. Then we tried to recapitalize the banks and that didn't work. So here we are. BTW, during this same stretch of "logical analysis" we also were told that we are in this problem because of government spent too much and had a debt problem, but that the only way to get out of it is to spend even more and go deeper into debt. The newwoman turned to the camera and said something along the lines of: I know that sounds strange, but it is the truth. Followed by two talking heads explaining how our relations with China are critical to the success of Obama's rescue.David Boaz recently described both Bush and Obama as embracing corporatism. He quotes Nobel laureate Edmund Phelps:
We are in trouble but it is a crisis of ideas that is most troubling. We are marching toward corporatist system as fast as the votes will take us. Who will say NO to this?
The fundamental corporatist idea was to retain the private income, private wealth and private ownership of firms that (were) so central to capitalism (and found in avant-garde examples of market socialism too) but to remove the brain of capitalism � to curtail and to modify the mechanism of experiments and discoveries undertaken by unorganized entrepreneurs and financiers on which capitalism relied. . . . Corporatism sought to interpose the interests of the whole society in a range of decisions affecting the directions taken in the business sector.Phelps wrote in 2000 about the corporatist state's inability to use the technological gains of the 1990s to improve its living standards nearly to the level of the those practicing more traditionally laissez-faire policies. In 2006 he wrote:
The premise of corporatist Europe � that prosperity and human development and productivity are fine but not at the expense of any of the �social partners� and certainly not at the expense of its job security � is disastrously wrongheaded. (A society should view a policy move from the viewpoint of citizens� life prospects rather than make the crude demand that every social partner gain from every transaction.) The economies built for job security have suffered the biggest swings in economic activity and have for two decades exhibited the highest unemployment in the OECD. The twin socialist goals of high development and high employment require the dynamism that only well-functioning institutions of capitalism can generate.This really should be the focus of critics of the Obama economic policy: It should not be solely focused on taxation. That's a rum game; when the government collects $3.7 trillion in taxes and borrowings it has enough to bribe a majority to take from the minority. It is the loss of the ability of individuals to pursue their own life prospects in a way that does not require the approval of others that this Administration is attacking, at many levels. From banking to freedom of conscience of an auto executive, we are stifling dynamism. Virgina Postrel once worried about the rise of stasis in good times, but we are now seeing it applied in bad.
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