It is one of the great curiosities of conservatism that its adherents enthusiastically destroy regulations which — besides a conscience — act as a bulwark against greed and corruption, thereby making greed and corruption inevitable. Because when (a) there’s no wrong way to make a buck, and (b) no accountability or consequences for malfeasance, there’s no disincentive either. (Other than being able to sleep at night, which isn’t a problem if you don’t have a conscience in the first place.) And when the inevitable happens, the resulting disaster spreads (because it is never really contained), they bemoan the very same rampant greed and corruption their deregulation made inevitable.
Naomi Klein found hints of it, in the musings of Alan Greenspan.
The tall graduate student, visiting the US from Sweden, would not be satisfied with a quip. He wanted answers. “They cannot only be driven by greed and power. They must be driven by something higher. What?” Don’t knock power and greed, I tried to suggest – they have built empires. But he wanted more. “What about a belief that they are building a better world?”
Since I began touring with my book The Shock Doctrine, I have had a number of exchanges like this, revolving around the same basic question: when hard-right political leaders and their advisers apply brutal economic shock therapy, do they honestly believe the trickle-down effects will build equitable societies – or are they just deliberately creating the conditions for yet another corporate feeding frenzy? Put bluntly: has the world been transformed over the past three decades by lofty ideology or by lowly greed?
A definitive answer would require reading the minds of men such as Dick Cheney and Paul Bremer, so I tend to dodge. The ideology in question holds that self-interest is the engine that drives society to its greatest heights. Isn’t pursuing their own self-interest (and that of their campaign donors) compatible with that philosophy? That’s the beauty: they don’t have to choose. Unfortunately, this rarely satisfies graduate students looking for deeper meaning. Thankfully, I now have a new escape hatch: quoting Alan Greenspan.
…Rand’s ideas about the “utopia of greed” allowed Greenspan to keep doing what he was doing but infused his corporate service with a powerful new sense of mission: making money wasn’t just good for him, it was good for society as a whole. Of course, the flip side of this is the cruel disregard for those left behind. “Undeviating purpose and rationality achieve joy and fulfillment,” Greenspan wrote as a zealous new convert. “Parasites who persistently avoid either purpose or reason perish as they should.” Was it this mindset that served him well as he supported shock therapy in Russia (72 million impoverished) and east Asia after the 1997 economic crisis (24 million pushed into unemployment)?
(Greenspan, by the way, recently said this is the worst economy he’s seen in his career. In fact, he saw it coming and declined to do anything about it.)
But, for me, it was the chapter about “disaster capitalism” in Russia — and the corruption and “self-dealing” that ensued, joined by the free market fundamentalists who had led the charge — from Klein’s The Shock Doctrine: The Rise of Disaster Capitalism that distilled it.
This points to nagging and important question about the free-market ideologues: Are they “true believers,” driven by ideology and faith that free markets will cure underdevelopment, as is often asserted, or do the ideas and theories frequently serve as an elaborate rationale to allow people to act on unfettered greed while still invoking an altruistic motive? All ideologies are corruptible, of course (as Russia’s apparatchiks made abundantly clear when , during the Communist era, they collected their abundant privileges), and there are certainly honest neoliberals. But Chicago School economics does seem particularly conducive to corruption. Once you accept that profit is and greed practiced on a mass scale create the greatest possible benefits for any society, pretty much any personal enrichment can be justified as a contribution to the great creative cauldron of capitalism, generating wealth and spurring economic growth — even if it’s only for yourself and your colleagues.
…When it was no longer possible to hide the failures of Russia’s shock therapy program the spin turned towards Russia’s “culture of corruption,” as well as the speculation that Russians “aren’t ready” for genuine democracy because of their long history of authoritarianism. …The economist Anders Aslund had claimed that the “temptations of capitalism” alone would transform Russia. Asked a few years later what went wrong, he replied “Corruption, corruption and corruption,” as if the corruption was something other than the unrestrained expression of the “temptations of capitalism” that he had so enthusiastically praised.
…The point of shock therapy is to open up a window for enormous profits to be made very quickly — not despite the lawlessness, but precisely because of it.
The movement that Milton Friedman launched in the 1950s is best understood as an attempt by multinational capital to recapture the higly profitable, lawless frontier that Adam Smith, the intellectual forefather of today’s neoliberals, so admired — but with a twist. Rather than journeying through Smiths “savage and barbarous nations” where there was no Western law (no longer a practical option) this movement set out to systematically dismantle existing laws and regulations to re-crate that earlier lawlessness.
I had the same reaction as that graduate student when, during my freshman year in college, I had to read Atlas Shrugged after losing a bet with an objectivist acquaintance of mine. It was my first and last time, because I understood it as tearing up the social contract that seems so important to McCain now; the one that implies giving up some rights in order to maintain social order, as opposed to a “state of nature” in which I have the natural right to do whatever I’m strong enough to do to you and vice-versa.
But that is the essence of conservative philosophy.
A Republican vision of social welfare would have to pass three tests. To satisfy the party’s economic conservatives, it must slash government costs. To satisfy the party’s social conservatives, it must eliminate incentives to personal misconduct and family breakup. And to satisfy the party’s pragmatists, the vision must be attractive and defensible.
One principle that passes all three of those tests goes something like this. Government should protect people only from risks they cannot easily protect themselves against: unemployment, natural disasters, catastrophic illnesses. Government should not protect nonindegent people against the predictable results of their own actions or the inevitable cycles of life — against the cost of retirement and college, against the fluctuations of farm and factory prices, against the miseries caused by idleness and addiction.
From there it has developed a bit further.
For over two decades, he’s subscribed to that old, discredited Republican philosophy — give more and more to those with the most and hope that prosperity trickles down to everyone else. In Washington, they call this the Ownership Society, but what it really means is, you’re on your own. Out of work? Tough luck. No health care? The market will fix it. Born into poverty? Pull yourself up by your own bootstraps, even if you don’t have boots. You’re on your own.
It is one America saying to the other, “Your on your own.” The 1.2 million hit by foreclosure, “You’re on your own.” To women facing their highest joblessness rate in 33 years, with worse yet to come, “You’re on your own.” To those in states running out of jobless aid funds, “You’re on your own.” If you’re among the 1.2 million hit by foreclosure, “You’re on your own.” (Also, you may lose your vote.) If you’re one of 72 million who had trouble paying for medical care, and have even gone into debt to do so, “You’re on your own.”
But if you’re an “indigent” corporation or wall street firm? You’re not on your own. And to prove it, we’ll spend $800 billion (that we don’t really have) to bail you out, and put ourselves deeper in hock to do it. Eight hundred billion dollars, to be supplied by taxpayers — those everyday men and women McCain claims to stand with. But getting just a small percentage of that amount to aid communities reeling from foreclosures and the blight metastasizing in their neighborhoods, was more than conservatives, McCain included, could stomach.
And that is the economy that conservative philosophy has given us, where the rule is not so much “survival of the fittest” as survival of the unfit.
Obviously, this is no laughing matter.. What is happening right now is a meltdown that is scary, mainly because we have no idea how much worse it’s going to get. It’s also
infuriating. For good reason.
There were plenty of warnings. For years, actually for decades, it has been clear that the money system had grown so deregulated it resembled the Wild West. Like any lawless frontier, it attracted and elevated slick, but incompetent hustlers whose only real skill was enriching themselves.
We’ve ended up with a Darwinian “Survival of the “Fittest” system, except in this case the only winners are those UNfit to have so much influence over how we all do survive.
They also recognize how to use their ill-gotten gains to control the lawmakers and opinion makers. As a result no one is willing to impose constraints, no matter how reasonable, or minimal.
And it’s that lack of constraint, kicked-off and cheered on by McCain’s economic advisors, that got us where we are now. But you wouldn’t know it to listen to him.
“But these are very, very difficult times. And I promise you we will never put America in this position again. We will clean up Wall Street. We will reform government. And this is a failure.”
You wouldn’t know to listen to him that the people who have his ear on economic issues are the some of the very same people who shaped the current economy. The policies of deregulation that got us here, by allowing Wall Street to run like a casino where those who lay the best never have to pony up, were their idea of reform. If you want to know what conservative “reform” looks like, well, we’re living it right now.
In a sense, it is failure. Conservatism failed people who believed it’s promises that free market run amok was good for all. In another sense it was a success; a “catastrophic success” in the same category as Iraq or Katrina, and with the same implications.
When Bush described Iraq as a “catastrophic success,” William Saletan defined the term; “If it gets worse, we must be winning.” When you apply the same notion to domestic disasters like Katrina, the definition might be more like, “If things get worse, the policies are working.” The worse it gets, the bigger a success it is for conservative philosophy. It’s just that the rest of us don’t, and can’t, see it that way.
…And so, the ongoing mishandling of the Katrina aftermath is only a mishandling if you believe that government should be in the business of helping improve the lives of citizens and can do so effectively. If you believe that it can’t and shouldn’t, then you have a vested interest in making sure that it doesn’t.
When it comes to the Katrina, the mission has been accomplished. For conservative ideology, it’s a success. A catastrophic one for some, sure, but a success nonetheless.
And the mishandling of the economy is not a mishandling of the economy at all, any more than the corruption that seems to follow in the wake of deregulation is merely the fault of a few naughty individuals. Like any fundamentalist ideology — like communism, for example — it relies on purity of belief and action from all players. That work if everyone bought into the social contract and everyone abided by it, but conservatism tears up that contract, declaring (as fundamentalists are wont to do) that the market has all the answers and will reward and punish accordingly. That leaves out the factor of simple human nature, and the likelihood that some people will do anything to get ahead or enrich themselves, even doing so brings harm to others.
One thing [Klein] spelled out is something that I’ve always thought regarding conservative or “neo-liberal” or “neo-conservative” economic policy. Namely that privatization and deregulation are a kind of “perfect storm” recipe for corruption, because the combination creates an atmosphere in which there’s no wrong way to make a buck.
If I can make more money, even though others will be harmed in the process, and I know there’s nothing prohibiting it and there will be no penalty for the harm done, the only thing stopping me is m conscience. And in that setting I’m better off if I don’t have one, because it can be a disadvantage. When the the rulebook is thrown own, and no holds are barred, at least some of my competitors in whatever business I’m in will certainly dive in and make money hand over fist. If I want to be competitive, then I’d better join the feeding frenzy, or I can be next on the menu. Right? After all, isn’t that what my shareholders expect? Maximum profits?
That’s essentially the economy that John McCain joined the rest of the conservative movement in creating. The same one he says he wants to reform. But how?
You can hear echoes in his campaign declaration from earlier this year that the best thing government can do to for business is “stay out its’ way,” and in his declaration (since given the spin treatment, to reveal what he “really” meant) that “the fundamentals are sound.”
The day before Hoover insisted that the fundamentals were strong was the day that came to be known as Black Thursday, when in heavy trading the Dow Jones Industrial Average lost about 9 percent of its value. And while, in endless stock-footage documentaries showing images of dumbfounded traders over a soundtrack of mournful jazz clarinets, the crash is supposed to begin the Great Depression, it wasn’t quite so. The real cause was the collapse of the banking system, which followed the crash in part because Hoover believed strong fundamentals would protect the economy from disaster.
For the likes of Hoover and McCain, asserting the strength of fundamentals is shorthand for saying that business leaders, with maybe a little cheerleading, can sort out the crisis and that Congress should not try to regulate their behavior. It’s too soon to know if McCain will be proved right (I doubt it), but Hoover certainly turned out to be wrong.
At the time, Sen. Robert Wagner, a New York Democrat, characterized Hoover’s response to the crisis as “the time-worn Republican policy: to do nothing and when the pressure becomes irresistible to do as little as possible.” In fairness, Hoover didn’t quite “do nothing,” but he followed a script that may sound familiar to students of the modern Republican Party.
Well. “Do nothing,” isn’t an entirely accurate description of the “change” McCain would bring. He supported Bush’s plan to privatize Social Security, and was still touting it earlier this year — a plan that would channel at least some Social Security funds into the hands of firms like the ones making headline with every report of mismanagement, and every collapse.
McCain may call himself a “maverick” — the McCain/Palin TV spot that repeats the word over and over again is running over and over again in our television market — but there’s little in his record to recommend him as such on the economy, except what we’ve heard in the past week. If that’s the criteria for measuring McCain’s cred as a “maverick,” it isn’t much. And in that regard, neither is he.
Crossposted from The Republic of T.