Alex Blaze

The economic collapse is a feature, not a bug, in American democracy

Filed By Alex Blaze | October 27, 2008 1:30 PM | comments

Filed in: Living, Media, Politics
Tags: Barack Obama, free market, George Will, joe the plumber, John McCain, marketing, paul krugman, sam donaldson, socialism

I'm writing this after just watching the blowhards on This Week discuss the Republican ticket and the economy, and Sam Donaldson actually showed some ability to hold a substantive policy position and started blustering in the general direction of George Will. I knew that one of the journalists would have to talk some sense into him - the panel was two Republicans and three journalists, no Democrats, because ABC wouldn't want to be labeled a liberal network - as Will continued to pound the need for deregulation of the finance sector. He eventually said, to an obviously incredulous Donaldson, that the finance industry, if properly regulated, would be run like security at the airport.

Conservatives are fond of emphasizing how those measures have meant no terror attack after 9/11, why they aren't rallying behind increased regulation right now?

What made Will's arguments in favor of deregulation so incredible was that we're living in the exact moment when market fundamentalism has never been more discredited. Even Alan Greenspan, who was the architect of the deregulated mortgage industry and chief advocate of those credit default swaps that have left our finance sector in ruin, admitted this week that market fundamentalism does not provide an accurate framework for economic policy-making. None of his projections, said the man who fell in love with the author of The Virtue of Selfishness while testifying before the Senate, took into account that people would be so selfish.

But debating a market fundamentalist like Will, who has invested so much of his career in selling that hard-line thinking, is like trying to convince a Christian fundamentalist like Pat Robertson that his interpretation of the Bible is inaccurate.

I was hoping that Barack Obama's surge in the polls since the stock market started crashing was because people had seen through the deregulation hype and saw the devastating effects that ideology left in its wake. I was also hoping that that was the reason that McCain's new "socialism" line of attack wasn't working - people aren't scared of anything that looks like socialism because they realize now that pure capitalism doesn't work either.

We could only be so lucky. But this ideology is embedded further in our national psyche than most of us even realize, mainly because four decades of movement conservatism has destroyed our ability to discuss class substantively.

Consider, for example, McCain's new Joe the Plumber stories. When McCain first mentioned him in the third debate, I just rolled my eyes. I've judged and coached enough high school debaters to know a common, annoying, and lame debate tactic coming up when I see one, and this one was just screaming it. Joe the Plumber was worried that he'd be taxed more under Obama's tax plan, a plan that would leave everyone who makes under $250,000 unscathed, if passed in its current form.

Obama said that, and McCain responded by saying that Joe was looking to buy his employer's plumbing business. That would put his income substantially over $250,000, meaning he'd have to pay more in taxes.

And now that I'm back in a battleground state, I'm seeing this ad all the time:

iPhone users: Click to watch

All I can hear is "I can't do math" over and over again in that ad.

The problem is that there are significant number of Americans who believe that they're going to be millionaires one day. They think that if they work hard then a six- or seven-figure income will just come to them.

And as Joe the Plumber so brilliantly demonstrates, that means that their loyalty is transferred upwards. Of course more taxes on the wealthy means more taxes on me! I know I'm going to be rich one day!

It's a perversion of what the American Dream is supposed to inspire, since people who haven't yet achieved what they want to achieve financially work hard to make sure that others won't be able to get into the middle class since they won't want to share the wealth when they get there. The irony is that they prevent themselves from reaching a decent quality of life in the process, since they themselves are the ones who have to be kept out of the millionaires club.

Meaning that, in the end, we have a much deeper challenge to work against in order to give more people the opportunities they need to succeed since there's already a mammoth machine dedicating to promoting this mass hallucination. There's no way George Will is going to give up his ideology, and there's no way he's losing his column unless he wants to or he dies. And there are many out there just like him looking to keep this unequal system going.

Alan Greenspan said this week:

Asked by committee Chairman Henry Waxman, D-Los Angeles, whether his free-market convictions pushed him to make wrong decisions, especially his failure to rein in unsafe mortgage lending practices, Greenspan replied that indeed he had found a flaw in his ideology, one that left him very distressed. "In other words, you found that your view of the world, your ideology was not right?" Waxman asked.

"Absolutely, precisely," replied Greenspan, who stepped down as Fed chief in 2006 after more than 18 years as chairman. "That's precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence it was working exceptionally well."

That "flaw" was the assumption that people working for large corporations would be looking out for the best interests of their long-term investors. Instead they tried to get as much money as they could in the short-term and retire.

I don't think that humans have much of an ability to mature or learn collectively over time. Paul Krugman posits that the reason Obama's ahead in the polls now has nothing to do with Greenspan's testimony and everything to do with coming off our temporary national high that led to frivolous decision-making, like deciding to elect a president on the basis of wanting to have a beer with him. As Bil Browning put it recently in a conversation with me, now Americans are looking for the smart guy, and Obama's definitely smarter than McCain.

Which means that if everything gets back to normal, we'll have a resurgence of the "Rich people are simply better than the rest of us" rhetoric that led to this problem in the first place. If we play our cards right, as the left, we might be able to stave off another financial crisis for basically the same reasons as we're seeing right now for another 50 years.

Because the George Wills of America will survive this to tell Americans about the evils of government regulation and the Joe the Plumbers who are faltering now will come back to their beliefs that rich people need to be protected because they're going to be rich one day too.

The ideas we need to fight against are just too much of a part of our culture to fight against directly, and they benefit people in power too much to get a real movement against them off the ground. But maybe one day we'll just come to accept people running the system into the ground, screwing the country and making off with a profit as a feature of the system, not a bug.

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Brynn Craffey Brynn Craffey | October 27, 2008 5:16 PM

Alex, that ad--and others like it--make me want to scream. Are people really so uninformed and stupid, after a two-year presidential campaign and 8 years of an absolutely disastrous Republican administration in which everything George Bush put his hand to, he wrecked, to believe such trite lies?

I already know the answer. It makes me despair.

That ad does seem to be everywhere lately, doesn't it? But it's the first major ad buy that McCain made in Indiana compared to the months of on-air time for Obama. There's a reason why Obama is pulling ahead in the polls here; people are starting to see through the charade of the McCain campaign.

I've never understood the principle of letting the market regulate itself. Tell the people with money to share it? Is that really enough to ensure a fair economic system? Shit, the only reason we don't have indentured servitude is that it's illegal, so corporations are working toward the next best thing.

And then there's this. Yeah, that money supposedly meant to encourage new loans is instead helping banks to buy banks (with some apparent encouragement from the Treasury).

If I were the paranoid sort, I'd wonder if someone saw a change in direction coming, and decided to loot what they can and get out while the getting's good.

Bill Perdue Bill Perdue | October 28, 2008 9:20 AM

Economic failure is the regular and expectable in a market economy based on greed, speculation and profiteering. The US has experienced 12 or so deep recessions since and this will be our third or fourth great depression since 1807 and our 14th or 15th recession since 1787 (depending on who’s counting.

The present crisis remains volatile. All the dominoes of catastrophic collapse are in place - collapsing credit, massive layoffs, cuts in working people’s living standards, widespread wage cuts, inflation, bankruptcies (made even worse by Biden's draconian new law) and foreclosures. They've already produced a deep global recession that's escalating towards a depression trending towards a global depression.

The Great Depression of 1931-1941 didn’t follow immediately on the heels of the stock market collapse of 1929. It took about 2 years to spiral down to that level and it ended by the war spending following the Japanese attack on Pearl Harbor.

Under various guises - Truman’s war against Stalinism, the Korean war, Eisenhower and Kennedy’s Cold War, the missile gap, the nuclear gap, the Vietnam war, MAD, the war on Terror, the war against islam and now the oil piracy – war spending has been the mainstay of economic prosperity. However it exacts a terrible toll economically and politically, breeding inflation, the creation of the neo-con military-industrial complex that sets the military and foreign policies of both parties, and the Imperial Presidency with its war on the Constitution. Add the resource wars, like the oil piracy and the deregulation of Carter, Reagan, Clinton and the Bushes and you’ve got a recipe for exactly the kind of disaster that unfolding before us.

The Democrats, a right centrist as opposed to a left party, will win big on November 4th. By January 21st it’ll become clear that they’re as bankrupt of ideas and solutions as the their Republican cousins. ‘Smarts’ have nothing to do with it, allegiances do. Obama and the Democrats, just like the Republicans, owe their loyalty to the corporate rich and the military industrial complex and the bigots they consistently pander to.

Soon people will begin making choices. They'll gravitate towards independent movements against the war, for the LGBT agenda and for the rights of working people or they’ll sink into the quagmire of futile attempts to reform the Democrats. They’ll stay mired in the party of Barney Frank, Nunn, Biden, the Clintons, Powell, “god’s in the mix” Obama, Feinstein, Pelosi and now Colin Powell or they’ll kick open the door and exit the last closet, the political closet. What they can’t do is both.

That's very smart, Alex. Excellent points, all. I never underestimate the stupidity of the American electorate. This idea goes back to Stevenson being unelectable because he was an "egghead".