The headline is “Reins devised for new economy” -- and the wording is apropos, since “reins” are used, traditionally, to keep horses from being all they can be, i.e. from running full-out. Reins are used, rather, to control, direct, and mainly to slow down... which neatly summarizes the Obama economic plan. The basic premise behind the Obama model is, on the one hand, indifference to growth, efficiency, innovation, and leveraging of technology... and outright hostility toward genuine competition. And, on the other hand, the liberal ideal of government being responsible for everything, and creating a risk-free society where all of the rough places are made plain, like the one that is about to come to pass... or so they think.
Now, I will be the first to admit that Obama & Co. inherited a degenerate, corrupt “mixed economy” situation where, as the saying goes, risk was socialized but profit was privatized. They also inherited a system where government is the servant of business and (to some extent) vice versa – AKA “fascism without the black shirts and salutes”. But in inheriting all of this, they took what had up to that point been corruption and turned it into an operating principle. And some will say that this is a good thing, because if government and business are inevitably to be strongly linked due to the complexities of the national and global economies, it is better to have them _all_ linked, equally and for the long term, than linked in a sub rosa, piecemeal way. In other words, if government controls, or at least regulates, everything, there is at least an appearance of fairness, and also an appearance of government protecting the interests of the taxpayers rather than only those of powerful business interests.
And the logic of the government takeovers (which are the “bailouts” grown to maturity) is iron-clad, even if the premises are questionable. If the government is expected to bail out any major business concern that runs the risk of failing, then it not only has the right to supervise, and regulate, the operation of those concerns, but it is morally obligated to do so. That is, any firm that is “too big to fail” must also be too big not to regulate, or even manage. As a taxpayer, I actually agree wholeheartedly with this logic! I am deeply offended by the bailouts, and will support any measure to insure that they never happen again... well, up to a point. Ideally, of course, the government would never have provided even the first bailout, and failing businesses would have been allowed to fail. (Think of amputating a limb that is terminally infected with gangrene and is thus a threat to the survival of the individual.) I can't accept that the “ripple effects” of these failures would have been any worse than the economic consequences of the bailouts – i.e. worse than the gross inefficiency, mismanagement, and outright criminality that will be allowed to persist, rather than being mercifully cut off. (Note that even bankruptcy is far from “the end” these days... but that is seen as the last resort, not only by the businesses in question but by the government.) And to be fair, the bailout idea did not begin with Obama, or even with George W. Bush. We had, for example, the first Chrysler bailout under Carter, and the S&L bailouts under Reagan and Bush I. So the concept is nothing new, and neither, for that matter, is the notion that bailouts lead – or ought to – to tighter regulation and control. The difference this time is in the scope of the problem, as well as its associated global impact. And as I've said before, the timing was perfect. The crisis started at the end of a failed Republican administration, which “reluctantly” started bailout procedures, which involved little or nothing in the way of compensatory regulation – i.e. there was nothing stopping the businesses in question from turning right around and doing the same thing over again. So when Obama & Co. took over the bailout business, all they had to add was a few very minor conditions to each one – you know, stuff like acquiring a controlling interest, and getting to say which executives would be hired and fired. So “capitalism” -- as it was mistakenly called – was set up like a duck in a shooting gallery by the Republicans, and the Democrats cheerfully took up arms and gave it (“capitalism”, that is) the coup de grace. All very ingenious, because this way no one is to blame; it just "happened".
But let's explore a few other angles to all of this. The political fix, for example, was simple enough – again, it was all a matter of timing. The lower classes never had any interest in “capitalism” to begin with – in fact, every time they heard the word all they could think of was a fat guy in striped pants and a top hat stealing candy from a little black girl. So that was a done deal. The middle class, on the other hand, would have been a harder sell, since they considered themselves beneficiaries (albeit in a modest way) of the capitalist system. The ones who did not have direct investments – a “portfolio”, as they would smugly pronounce to the employee lounge denizens – certainly had indirect investments through various savings plans, retirement funds, etc. So what would it take to wean them away from the big boys' game? Try a Dow plunging to about half of its all-time high, and taking everyone's 401(k) along with it. Try the white-collar dude getting the horse laugh from the guys on the loading dock, who knew better than to invest in anything but HDTV, cars, and beer. So the middle class, which was politically apathetic compared to the proletariat, got fighting mad (or as fighting mad as they ever get) and willing to not protest the overt deconstruction of the “capitalist” system. Mission accomplished!
But what about the titans of industry themselves? Well, as I've said, these are not your father's Oldsmobile execs. These guys are scared to death of genuine competition, and are more hooked on government contracts, subsidies, and bailouts than a crack addict is hooked on crack. So when someone – we know not who – told them, “It ain't your night, kid”, and to take a fall, they did so with very little hesitation, because they knew that, the next morning, they could get up, brush themselves off, and take the first corporate jet down to Washington to beg for a bailout, out of which the first “emergency” expenditure -- right off the top -- would be their own salary and benefits. To call these guys whores is a gross insult to ladies of the night. And lest anyone still believe that “mistakes were made”, and that the various business failures were the result of mismanagement and stupidity, please bear in mind that the executive salaries have remained untouched (so far) out of fear of a “brain drain”. No, these failures were planned, programmed, and carried out with the same precision as the successes and capitalist triumphs of yesteryear – but by an entirely different species of people and in an entirely different economic and political environment. It has been repeatedly said, throughout all of this, that the government is “rewarding failure”. What the critics fail to see is that when you reward failure, it's no longer failure. It's success – but of a different, grotesque, and perverse sort. And yet, we could even see this coming, with the spectacle, for many years now, of top executives running companies into the ground then leaving with titanic compensation packages. The correlation between “performance” and reward has been – well, not even neutral. For some time now, it has actually been negative – the biggest “failures” lead to the biggest rewards. What can this possibly be but the people in charge of American business and industry being rewarded (paid off, bribed) for destroying “capitalism” and paving the way for socialism? And this is not just reasoning backwards from results, because there is overwhelming evidence that this is precisely what has been not only allowed to happen, but encouraged to happen – and the Republicans were every bit as involved in the “revolution” as the Democrats.
So the question then becomes, don't Americans “believe in” capitalism any more? But the question actually is, did Americans _ever_ believe in capitalism? In principle, I mean, not just based on whether or not it put money in their pockets. Again, referring to the work of Ayn Rand, people believed in capitalism as long as it “produced” for them – but as to believing in the actual principles of capitalism, which involve serious risk-taking and some chance of financial ruin... well, no. That's the sort of thing that terrifies most Americans, as it does most people around the world... and they are willing to give up most, if not all, of their freedoms to insure that it never becomes the case. Why else would the word “capitalism” be tied, in nearly all instances, to the word “cutthroat”? Why would it be universally described as “ruthless”, “unfeeling”, “brutal”, “greedy”, and so on... not to mention the “fact” that it creates an undesirable meritocracy and mercilessly discriminates against those less able? Do a word association test sometime using the word "Rockefeller" (and in Pittsburgh you can add "Carnegie", "Frick", and "Mellon").
The perennial liberal notion is that all have won and all should receive a prize. The capitalist notion is that, in any line of enterprise, there will be a best, a second best, a third best, and a bunch of also-rans. There will be more failures than successes, more losers than winners, and more Indians than chiefs. (Some would say more serfs than slavemasters.) The problem with all of this is that, in fact, liberalism is every bit as elitist a point of view as capitalism, the difference being the criteria by which the elite are defined, i.e. by political success rather than success in the free market. And it can also be contended that capitalism is more humanitarian than liberalism, because it doesn't put arbitrary rules and regulations in the way of people achieving as much as they are able – given the vast range of human capabilities and motivation (all of which liberals seem to find terribly offensive). And it will inevitably be pointed out that societies built on the capitalist model generally offer more prosperity, more of the time, to more people (through certainly not all), whereas liberal societies feature a great leveling – and it is, most often, a leveling down. But even so, there are many factors that contribute to the overall success, or standard of living, of a society besides its basic economic and political models (for which see P. J. O'Rourke's “Eat the Rich”, as an introductory text).
Nonetheless, the America of right now, today, has apparently (if we listen to our president) grown weary of the empty promises of free enterprise and capitalism, and is ready to consign those outmoded ideas to the dustbin of history, to be replaced by liberal, socialist, millennial, utopian, all-embracing government programs administered by the self-sacrificing likes of Tim Geithner, Ben Bernanke, and Obama himself. Well, this could, at least, be the great cleansing so many of us have been hoping for for so long – you know, that process by which things have to get much worse before they can get better – and mainly before people can be convinced that some ideas really are better than others. Right now, we've decided that capitalism is just too cold and unfeeling, and besides -- says, or thinks, the average American -- all the capitalists I know are criminals, and they stole all my money. Whereas who has not heard, around the fireside, many tales and legends of the New Deal, and the Emperor Franklin, and how he saved the nation, and therefore the whole world, from a return to the economic Stone Age? And everyone knows that the New Deal didn't “fail” -- it just wasn't allowed to have... well, free rein.
The problem with “teaching people a damn good lesson”, though, is they are, by and large, incapable of learning. For each story about a problem the New Deal “solved”, there must be hundred of stories of waste, fraud, abuse, exploitation, resources squandered, opportunities missed, and lives wasted – but Ken Burns is never going to put a winsome PBS series together on any of those. All we see – all we are capable of seeing – is what happened; what didn't, or couldn't, happen simply never enters into the picture – politically or any other way. And the “history” of the present era, in the economic sense – which is already being written – will suffer from the same defects. Obama will be, for the next generation, what FDR is for this generation – a somewhat remote, but nonetheless legendary and all-powerful, savior. His “new economy” will become the standard, and will be taken for granted to the point where no one will be able to imagine things any other way. And no one will miss capitalism – because, frankly, there is no living memory of genuine capitalism anyway, and certainly no one will ever miss this painted-up-pig model we have gotten used to since. So in that sense, the cleansing might do some good – it will at least wean us away from the delusions of a “mixed economy”, which seems to feature the worst of both laissez-faire and socialism. It will force people to, at long last, live with the consequences of their foolish political, social, and economic choices of the last few decades... and it might just spark a new interest in genuine capitalism as well as “third way” models like Catholic social teaching and Distributism.
The funny thing about true liberty, as I've always observed, is that it is the only political, social, and economic model that people have to want for its own sake – i.e. on principle, rather than merely its payoff potential. All other systems can be embraced and exploited for the wrong reasons... but I just can't see this happening with libertarianism. Sure, there are marked differences in concepts of application, as well as how “radical” you want to be, but I don't see a wide divergence on principles or any tendency to violate those principles in favor of other agendas. Libertarians are, of course, human and therefore fallible... but as people of principle (especially compared to the “sheeple” that constitute the vast majority of the populace) they don't come off as irrational, inconsistent, impulsive, roguish, or foolish on a regular basis. Their only failing is that they are simply unable to “sell” their ideas to people who are not, for some reason, predisposed to believe in them – thus the apparently impenetrable “ceiling” when it comes to vote percentages for libertarian, or even paleocon, candidates. But, where principles and ideas fail, actual experience might avail – and this society is about to have an “actual experience” that will make all of those it has had up to now look like daydreams. There is living memory in Europe of hyperinflation, mass persecutions, food riots, martial law, and economic chaos... but we have been sheltered so far. I fear that those days may be over – not that the people in charge will cease being in charge – i.e. we're not talking about revolution here, to say nothing of anarchy. It's more about what the powers that be will allow to happen, for reasons of their own, and the ability of Americans – especially those who have lived their entire lives in a state of smug, complacent bliss – to survive. What appears at the end of the storm will, I suspect, be more different than we even imagine -- more different than the dire pictures painted by Obama's severest critics. We may find ourselves waxing nostalgic about the “good old days” when the government was just starting to take over American businesses and the financial sector, and when most people still had jobs, and income, food, and a roof over their head... and the Dow was above 8000... or there even _was_ a “Dow”. The question then will be, how far down do things have to go before they can go up again? Will it be "creative destruction" or just plain destruction? Will it look like “Blade Runner”, or “Mad Max” -- or more like “The Matrix”? (Or, for the “retro” buffs, maybe like "1984" or “Metropolis”?) And through it all, there will be the chronic, vexing question of – what do those in charge want? How is this all serving their desires? That may be the biggest mystery of all... but that question can already be asked; we don't have to wait until next year, or for ten years. Who, other than the corrupt executives themselves, benefited from the self-immolation of American business? Certainly the people whose goal in life is to control (or appear to control) everything – i.e., anyone on Obama's team. These are not people who thrive on other people's freedom, au contraire! The more stress and chaos, the better for them – because that will cause people who might have been a bit hesitant about turning everything over to the government to go running to them for help (a process which has been underway for generations now, but which has recently received a gigantic boost). But Obama's team -- although the most visible and high-profile of the new generation of commissars -- are not really running the show. They are serfs, and tools, of much higher powers, and it's their motives that I'm interested in.
And of course, there are still people around the world who are making money – hiding money – out of all this. In times of trouble, the leeches and parasites become the privileged class – economic and social cannibals, they cruise through deserted streets in limousines, surveying all that they have made and taking perverse pride in being the king of an ash heap. These are not the capitalists idealized by Ayn Rand; they are a mutation, which – one fervently hopes – is unsustainable and will eventually burn itself out. But in the meantime there is going to be a lot of misery, much of it suffered by – as I've said before – people who always thought “hard times” were what happened to other people.