A new poll on Talking Points Memo finds that 55 percent of likely voters believe President Obama is a "socialist." That's rich on a couple of levels. First, if Mr. Obama were a real social democrat we'd have universal, single-payer health care, a major program to rebuild our nationwide rail system, superior public schools and affordable or free (real) universities, a comprehensive social-safety net and an appropriate tax on the rich and corporations. That we don't says the president is a Clintonian corporatist at best, and millions who voted for change are disappointed and not likely voters. The second laff riot is that these morons polled don't even know what socialism is — and yet, as Arizona can teach the nation — morons vote, feverishly.
"Economic freedom" is code for...what exactly? A selfish nation of dolts that thinks roads and sewage plants are made by elves in the middle of the night, and thus the dolts shouldn't have to pay taxes? Never mind that America pays some of the lowest tax rates in the industrialized world, most major corporations pay none, and we suffer infrastructure, competitive, social and state budget crises as a result. Does it mean you should be allowed to build a toxic waste dump in your backyard — even though you would be the first to report your neighbor's unauthorized paint scheme to the homeowners' association? Economic freedom is the gibberish of the uneducated, the selfish, and aggrieved, all indoctrinated by the ubiquitous Fox "News" and white-right talk radio. Yet it is the phrase of the moment and people mouth it, along with their gun lust, theocracy and hatred of "the other" like 1930s Germans saying "Kinder, Kuche und Kirche!" or "Drang nach Osten!"
As a "socialist," taking away our "economic freedom," Mr. Obama shows his hatred for that sacred American concept, "the Free Market." What does that mean? In the elegant world of theory, it implies that given maximum freedom, human action in the marketplace will produce superior results to any kind of command economy or "industrial policy." Price signals tell producers what customers want and employees where the jobs are. Competition keeps new ideas, products and services coming. The "invisible hand" — Adam Smith uses the phrase only once, and narrowly, in The Wealth of Nations — presides over this mysteriously and effectively but...well, you don't mess with the hand. The theory has been relentlessly pushed down and dumbed down over 30 years so that perhaps a majority believe it as an article of faith. Or better. C.S. Lewis wrote of Christianity something to the effect that "it's just screwy sounding enough to be true." Free market church-goers have a completely closed-loop "proven reality."
The problems with this conception are too many for this modest blog. But we can begin. By implication, the George W. Bush revels were "the free market" at its zenith. Thus, the worst economic collapse since the Great Depression is a sound repudiation of the theory, just as the Depression sent laissez-faire into the wilderness for two generations. One other thing Mr. Bush taught us: Aside from the secret agendas of the oligarchy, "conservatives" can't handle the complex issues facing a 21st century society. But don't try telling that to a graduate of Glenn Beck U.
What emerged from the New Deal and Franklin Roosevelt's willingness to experiment was what my generation would consider American capitalism. It produced the greatest economy the world had ever seen, including consistently rising wages and living standards for average people. It contained many elements of classical capitalism (for which the hard left would never forgive FDR). But it was in reality a mixed economy, a delicate, complex and dynamic balance. To simplify, it contained two important elements. First was regulation to ensure competition, prevent the formation of monopolies and cartels, protect smaller players and customers, and tamp down the speculation that helped cause the Depression. Without such checks, the best of the free market will always be trampled. Second, it entailed a great deal of pluralism and checks and balances, including unions. This American capitalism served the nation well and even survived the Reagan years — a Reagan apologist might say his reforms strengthened it. Reagan's hero was FDR, after all. This is the America so many aimlessly, desperately angry people long for.
Especially since 1990, many of the props that kept this economy so well-functioning for most Americans and so resilient have been knocked away. Deregulation has been accompanied by "regulatory capture," where the regulated companies send former executives to staff regulatory agencies. The banks and BP come to mind. "The market will regulate itself...be self-correcting." That's what the fiction writer Ayn Rand told Alan Greenspan. The amount of money corporations can pour into politics and conservative causes has exploded. Lack of antitrust caused waves of mergers that decimated local economies and heavily concentrated industries. Bad trade deals did worse damage, especially to manufacturing (ask the shade of Adam Smith about its importance). Years of unfair labor laws decimated unions. The result has been a steadily faltering economy kept alive by bubbles and a financialized economy trading Monopoly money derivatives. The wealth it took a century to build is being sold off. And even though a moneyed elite is in firm political control, for the first time in American history a cohort growing to a majority can expect worse living standards than its parents.
Through all this reign of "the free market," we had a very large government involved in the affairs of business and the economy more than ever, right down to helping set the explosives that nearly brought down the house in 2008. Nor have we lacked for "industrial policy," whether it is subsidizing the oil-auto-housebuilding complex or carrying on endless wars atop more defense spending than all other nations combined.
This freefall was not caused by "socialism." It was caused by "conservative" free-market theories put into action as a rigged market. Mr. Obama has regrettably been a party to it. He saved the financial elite. He kept GM and Chrysler building internal combustion cars. Taxes have been cut. The rich are richer than ever, whereas they lost ground during the Depression. We will "drill, baby, drill," with cosmetic corrections. Our schools, universities, transit systems and other commons are suffering. If Hank Paulson's memoir is to be believed, Sen. Obama pretty much took charge of the nation in a pivotal 2008 meeting during the panic, while wealthy Republican John Sidney McCain III sat in paralyzed silence and W was already outta there.
So in a grotesque way, President Obama should be the conservatives' darling. Except that he's a Democrat, and an African-American, and there's still enough of America that hasn't been looted that he must be, as Sen. DeMint would say, "broken."
2010 aka 1984
WAR IS PEACE
FREEDOM IS SLAVERY
IGNORANCE IS STRENGTH
*********************
PALIN IS SMART
In my adult life, I have never been so frustrated as I am when I run across FOX NEWS robots. Worrying about the free market will soon be the least of our worries. We are rapidly losing our free society. It is slipping right through our fingers. The "Powers that be", who ever that is, learned a very important lesson from old George Orwell, IGNORANCE IS STRENGTH.
If FOX NEWS told them so, I have no doubt that our ignorant masses would stop going on ocean cruises for fear of falling off the edge of our flat earth.
Outside of this blog, does anyone know if there is any intelligent life out there??
These FNR's (Fox News Robots) really do believe to the core of their souls that ZERO taxes is the cure for everything. Yet, they are the first to call 911 when they stub their toe on Camelback Mountain. Who do they think pays for the helicopter which comes to their rescue???
Posted by: AZREBEL | July 09, 2010 at 04:21 PM
I agree with most of this, but the "closed-loop" is even more tautological than Mr. Talton suggests.
Any genuine "free-market" zealot would surely disagree with the assertion that "the George W. Bush revels were "the free market" at its zenith".
The problem of course is that it's difficult to say when this country EVER had a "free-market" by such standards.
It wasn't such at the time of the founding fathers, because of the tariffs and other government mechanisms which protected domestic production and allowed it to survive, grow, and even flourish in the face of stiff competition from established imperial economies in Europe; not to mention the fact that slave-labor is incompatible with a free-market (remember, England outlawed slavery in 1772).
The real problem with the "free-market" thesis is that it's pig-ignorant of history, political-economy, realpolitik, or any concept of the fact that markets function in a framework of laws and that such frameworks are the antithesis of their thesis.
I'm running out of online time, so perhaps we can continue this tomorrow. If anyone wishes to suggest a time when the United States was a "free market" it might make for an interesting follow-up discussion.
Posted by: Emil Pulsifer | July 09, 2010 at 04:53 PM
@ AZRebel:
There are further signs of intelligent life on other blogs such as Eschaton/Atrios (Duncan Black), Talking Points Memo, Balloon Juice, Grasping Reality With Both Hands (Brad DeLong), A Tiny Revolution and, from a paleoconservative perspective, Eunomia.
Posted by: CDT | July 09, 2010 at 05:20 PM
"...the formation of monopolies and cartels...", that is, what people fail to see, the inevitability of a truly free market and it's those people most hurt by such a system that cry for it's survival and expansion: the uneducated.
Posted by: AbsoluteExhilaration | July 09, 2010 at 09:07 PM
At the root of our civilization, our culture of technology, and our markets, lays one undeniable reality: our unquenchable hunger for energy.
For (tragi)comic relief from Arizona’s economic doldrums, one only need to travel to downtown Phoenix, attend an Arizona Corporation Commission meeting, and listen to the pablum of “free market” “philosophy” being spewed by lesser commissioners with respect to the large, “natural” monopolies of Arizona’s electric utilities.
Such unconsidered and unconstrained proselytizing has had the unfortunate result of leaving the utilities effectively unregulated. Of course, the predominant Arizona psychosis -- as best reflected by the Goldwater Institute -- colludes with this fraud.
The best evidence of the Commission’s failure is the hidden, regressive tax created by the arcana of Arizona’s unique electric utility rate schedules. These rate schedules help to maintain a “market” that is captive to an energy system of unparalleled corporate socialism: all the guaranteed profits are returned to “investors”, while all the risks -- long-term and toxic -- are pushed into the public sector. (Does this remind you of any recent events in the financial sector?)
Today’s “free market” faith -- or rather the spiritual vacuum that underlies such selfish faith -- will deliver a very heavy burden to our children. One need only look to the Gulf Cataclysm to see where such faith leads. The inner word of the chant, “Drill, baby, drill”, is most telling: this celebration of our culture’s infantilism is a tragic echo of our infantile delusion of a “free market”.
Happy Bastille Day.
Posted by: Rate Crimes | July 10, 2010 at 05:30 AM
Obama did a reasonably good job defining Republicans in an electioneering soundbite last Thursday:
* * *
Obama listed Republican policies that he said led to economic disaster: lower taxes for millionaires and billionaires, fewer rules and regulations for the biggest corporations, and decisions that "cut working people loose.
...His jabs grew sharper as his remarks closed, saying Republicans care more about political points than "what it means for the next generation" and side with corporate titans over regular Americans.
"They don't think in terms of representing ordinary folks. That's not their orientation," Obama said. "So, that's the choice we face in this election. We got the Bartons and the Boehners and the Blunts. They've got that 'no' philosophy, that 'you're on your own' philosophy, that status quo philosophy."
* * *
But he demonstrated considerably less vision, and vigour, in defining Democrats:
"As for Democrats, he said their policies are straightforward, too: cut taxes on the middle class, make sure big corporations are "playing by the same rules" as small businesses and invest in making sure people get the "skills for the future." "
http://www.azcentral.com/news/articles/2010/07/09/20100709obama0809.html
Wow. This is not the plan of a socialist. This is not the plan of a social democrat. This is not even the plan of a liberal. This is the rhetoric of a cowardly, mealy-mouthed, centrist who understands as well as Republicans do who butters the bread of the two major parties and their members in Congress.
Posted by: Emil Pulsifer | July 10, 2010 at 01:42 PM
Incidentally, in public policy discussions of marginal tax rates, and what constitutes a "fair share", it's clear that most individuals have a poor grasp of concretes.
Consider this: $2.5 million dollars may not seem like "a lot" of money by some standards. But it could pay the salary of someone earning $50,000 a year for 50 years. (Shocking? Yes, it is, but get the calculator out.)
Now, imagine someone earning $2.5 million, not as a one-time payment (say, a lottery win) but each and every year. That individual's income for a SINGLE year could pay for the entire lifetime of a comfortable, middle-class family from the age of marriage to retirement. What's a fair marginal tax rate on such income?
(Caveat: yes, inflation will reduce the spending power of $50,000 considerably over 50 years, but the basic point remains.)
Posted by: Emil Pulsifer | July 10, 2010 at 01:53 PM
Closed loop II: The faith in an unrestricted market is understandable because it's a very elegant belief system and it has a lot of truth in it. "If we could only get government out of the way..." So the current frustrated anger finds its valve in a reactionary fantasy of progress, a tickling of the anarchistic vein. A liberating show of strength is supposed to clear a straight path to a better future. But there won't be a better future, only a different one. Problems will keep stewing as they have for decades -- they have progressed to a point that IMO even Obama, Glasnost & Perestroika won't be able to turn things around. Which will give the angry freedom fighters even more reason to demand a return to 'enterpreneurial values'. That return or better rollback will be forced by circumstances not legislated. "Letting go" may be the only viable course of action. If the systems of our society come under pressure and the dominoes start falling we will have more freedom (and free time) than even Ron Paul might wish for. We will be living in the world of Darwin & Hobbes. The reaction will be vastly different depending where they're coming from.
The hardcore back-to-the-land libertarians who sit in their bunkers in the Rockies at least put their money where their mouth is. They may even have a point in the long term.
Then there is the light version (including "garage business libertarians", most tea partiers, "Government should only do the military and the roads." etc.) They may have a harder time adjusting to reality. Freedom works! But not always in a benign way. When the return to 'free enterprise' implies a good deal of mayhem, the faithful will either turn even more insistent or they will likely be crying and wishing for the spoils of 'socialism'. You know, "roads" and such.
Posted by: AWinter | July 12, 2010 at 09:58 AM
Ezra Klein of the Washington Post has written a short but sweet item exposing phony "deficit hawks", illustrated with Arizona's own Sen. Kyl:
* * *
Jon Kyl gives away the game on deficits
"[Y]ou should never raise taxes in order to cut taxes," Jon Kyl said on Fox News Sunday. "Surely Congress has the authority, and it would be right to -- if we decide we want to cut taxes to spur the economy, not to have to raise taxes in order to offset those costs. You do need to offset the cost of increased spending, and that's what Republicans object to. But you should never have to offset cost of a deliberate decision to reduce tax rates on Americans."
What's remarkable about Kyl's position here is that it appears to be philosophical. "You should never have to offset cost of a deliberate decision to reduce tax rates on Americans," he said. Never! This is much crazier than anything you hear from Democrats. Imagine if some Democrat -- and a member of the Senate Democratic leadership, no less -- said that as a matter of principle, spending should never be offset. He'd be laughed out of the room.
Back in the real world, tax cuts and spending increases have the exact same affect on the budget deficit. This sort of comment is how you tell people who care about the deficit apart from people who are interested in exploiting fears of the deficit to shrink the size of government. It's also the sort of comment that makes clear that the deficit commission's work is doomed, even if they do go with three-quarters spending increases. Democrats won't accept an unbalanced product and Republicans won't accept a balanced product.
http://voices.washingtonpost.com/ezra-klein/2010/07/jon_kyl_gives_away_the_game_on.html
Posted by: Emil Pulsifer | July 12, 2010 at 10:23 AM
Laissez-faire advocates fail to understand that unlimited concentration of power is every bit as oppressive in economies as in governments; and that economic concentration of power leads almost inexorably to concentration of political power, as oligarchs intent on getting their way in the economic sphere see the political sphere as a potential threat.
This is ironic, because one of their arguments (not without some validity, and not limited to libertarians) is that politics is inevitably corrupted by concentrated economic interests and that therefore regulators end up in the pockets of those whom they are supposed to supervise. What's left is a watchman with a pair of gimpy legs (the Republican and Democratic parties).
The real solution to this problem of co-optation would include a completely public system of campaign finance. Prospective candidates would be required to demonstrate their viability by collecting a qualifying percentage of signatures from registered voters. This would weed out some of the wackos and reduce the number of candidates to be funded, but could still be accomplished by grassroots efforts. No private funds would be permitted to be used in any political campaign -- period.
That wouldn't address the loophole of "independent" private groups using their wealth to saturate the mass media with "information" ads; nor would it address the problem of politicians favoring business interests in exchange for the prospect of a cushy private sector "consulting" job after leaving office; nor the problem of congressional staff (who do the practical work of researching and crafting legislation) being co-opted by big business behind the scenes and influencing the politicians they work for; but at least public elections would be a start, and could be supplemented by other controls. If it takes a constitutional amendment to accomplish this in the face of recent Supreme Court rulings, it would be worth it.
The conservative "solution" to the problem of the watchman with gimpy legs -- who after all is still better than no watchman at all -- is to fire the watchman and let the "honor of thieves" (i.e., the free-market) sort everything out.
The idea that free competition allows greater consumer choice and provides a more effective and natural set of rewards and punishments to economic players is, up to a point, true. The problem is that political mechanisms are not the only way to game the system: the economy itself provides ample means for the most powerful economic players to effectively stifle competition, if allowed to.
What happens, then, under a true laissez-faire system, is that economic power is concentrated among a small number of big firms, who then use that power to stifle competition in ways that have nothing to do with the relative merits of competitors and their products/services.
A system in which a few big banks control the availability and terms of commercial credit -- being able to offer better loan terms than anyone else to those they favor (favor being determined by interlocking corporate directorates), or conversely, no credit to those they don't favor, leaving the latter to seek credit (vainly or at disadvantageous terms) from smaller banks -- is one in which he who owns the gold makes the rules.
Supermarket and other store display shelves have room for a limited number of products -- far less than either actually or potentially available. Commercial arrangements between manufacturers and the stores which stock and prominently display their products -- or don't -- can stifle meritorious competition from small-fry.
Similar problems from economic concentration can plague distribution chains, supply chains, advertising, and other aspects of commerce, in the absence of external regulation. I say this with confidence because such problems already exist, to a degree, under our current (fairly weak) regulatory system.
Libertarians claim that, in the face of such bottlenecks, competition would produce new players more responsive to merit. But the goal of economic activity, from the standpoint of businessmen as opposed to philosophers, is to make as much money as possible, not to maximize competition. Getting around oligarchic control of finance and credit, of marketing, distribution, and supply bottlenecks controlled by oligarchs, would require the creation of new, parallel commercial infrastructure systems serving these needs for competitors, and the start-up costs of such networks would be prohibitive -- and from whom would financing be obtained? Another prohibitive expense would be the cost of prolonged price-wars with established, concentrated economic powers eager to destroy upstart competitors.
In short, free competition sows the seeds for the destruction of free competition. Ask anyone who ever worked in a "company town" (until they stepped out of line) how that worked out. The inevitable result of unrestricted economic competition is quasi-feudalism, from which the only escape is revolution.
Ironically, the only way to maintain any significant degree of competition is to regulate it. In order for that to work, it has to be effective (i.e., vigorous) and fair. That means recognizing, once and for all, the legitimate role of regulation, instead of opposing it in the abstract on the basis of doctrinaire political principles; it also means giving regulatory bodies the power to effectively regulate, and funding them with budgets which allow them to fulfill their mandate.
Conservatives point to the byzantine mass of the Code of Federal Regulations as evidence of the burden, and the lack of transparency (since it must be administered by a cadre of specialized attorneys) inherent in regulation.
But to a surprising degree, a large portion of this bulk consists of exceptions introduced by politicians on behalf of special interests. The tax code, for example, has a short-form for those taking the standard deduction, and another process of virtually unlimited length and complexity for those itemizing deductions (e.g., corporations). Other sections of regulatory code contain the equivalent of "earmarks" for specific industries and groups, or even (in effect) specific companies.
To the extent that this is true, "regulatory simplification" would consist merely of doing away with the exceptions and thus leveling the playing field -- and this is consistent with the goal of fairness in regulation.
The remaining complexity of regulation can be attributed in large part to the fact that there are numerous industries; that fair regulation means specifying clearly and predictably what is and is not allowed; and that each industry has its own special details and problems. In these cases, the length and complexity of the regulatory code as a whole is of no practical concern to anyone, and of abstract concern only to simple-minded and doctrinaire political philosophers. Each industry is concerned with those regulations governing its activities (many of them dealing with special circumstances which seldom come into play), and none other.
Conservatives have a bad habit of using anecdotes involving the inevitable (but occasional) regulatory excess as arguments against regulation per se, instead of arguments against THOSE regulations.
Often, misrepresentations, exaggeration, and prevarication (the misleading omission of critical facts) informs the anecdotes, since they are conceived by right-wing think-tanks (funded by wealthy corporations and individuals) as agit-prop to advance their doctrinaire political agendas, rather than as sincere and well-meant attempts at reform. These are then spread via reactionary talk-radio and websites, where they take on a life of their own, often with additional embroidering in the form of fictional "corroborating" stories told by callers. Somewhere along the way, whether in response to "reports" sent directly by think-tanks, or as a way to use the popular outrage of their core constituents, or both, they become talking-points for conservative writers, politicians, and activists.
Posted by: Emil Pulsifer | July 12, 2010 at 03:16 PM