In my TAC review of Jonah Goldberg’s The Tyranny of Cliches, I suggested a few lexicological alternatives for the phenomenon that people are describing when they criticize “ideology.” “Apriorism” was one; “absolutism” another.
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Good old-fashioned “tribalism” was a third.
On that score, the apriorists-absolutists-tribalists of the conservative mainstream dutifully insist that any criticism of Bain Capital is tantamount to anti-capitalism, full stop. More broadly, we’re not allowed to have any qualms about the financialization of the American economy or to entertain the possibility that high financiers are not necessarily another species of entrepreneur.
“Obama wants the middle class to do well, but does not see the role that people with risk-taking capital play in building job opportunities for economic advancement at all income levels,” as Don Lambro put in a column about Obama’s “Anti-Capitalism Strategy.”
Sounding oddly hip, Jack and Suzy Welch decry “this movement afoot that hates on business.”
And Rush Limbaugh drops the hammer:
I think it can now be said, without equivocation … that this man hates this country. … Barack Obama is trying to dismantle, brick by brick, the American dream.
Groan.
Fortunately, there is a constructive conversation happening elsewhere.
There’s the indirect Austrian short-term critique of financialization that implicates central banking — in particular the “persistently easy monetary conditions” that led to the current financial crisis.
Relatedly, there’s John B. Judis’s long-view argument that financialization is a byproduct of the true cause of increasing inequality and anemic growth: the decline of American industry that followed the unraveling of the Bretton Woods system of gold-pegged currencies, bringing us the era of massive trade deficits and relentless downward pressure on wages.
After Bretton Woods was replaced with a system of floating exchange rates, the United States, Europe, and later parts of Asia and Latin America gradually removed controls on the mobility of capital and the value of their currencies. That gave the world’s leading banks and insurance companies, as well as a host of hedge funds like the infamous Long-Term Capital Management, new ways to make money.
Judis’s recommendation is for the U.S. to get “tough with its trading partners” — which Mitt Romney promises to do if he’s elected — as well as subsidize industrial “innovation and growth” — which Romney and co. dismiss as so much crony capitalism.
What the Austrians and left-liberals like Judis have in common, it seems to me, is a recognition that the U.S. economy was fundamentally unsound long before anyone had heard of Barack Obama — that the Reagan-Clinton-Greenspan boom (if you want to think of it continuously) was built on an unsustainable model. The Austrians finger Fed-fueled asset bubbles; Judis, deindustrialization.
At its essence, this is a conversation that doesn’t ask “Whither capitalism?” but rather “What kind of capitalism should we have?”
I wish more of my confreres on the right were willing to have this conversation.
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Scott Galupo wrote:
“I wish more of my confreres on the right were willing to have this conversation.”
I don’t know that I can have that conversation, and indeed I know it sounds so unsophisticated that maybe I clearly can’t, but for me I just start with the question of what precisely is meant by the term “financialization” of the economy, which has clearly and massively been happening and contributed massively if not totally to our situation.
And my unsophisticated thinking is that what “financialization” means is simply the rise of concerns devoted to encouraging and enabling speculation, including the doing so with debt. And thus this not only means firms or concerns trying to get you to speculate on stocks, but also, to a lesser but still significant and telling degree of importance, firms and concerns trying to get you to speculate that you will be able to afford a certain credit card load, or a certain house.
I suppose from there one could call a “financialized” economy a “different model” from a lesser financialized one, but I would differ. Yes, it’s a different economy, but certainly some speculation existed in the old days too, and I believe the economic laws governing those old days haven’t been repealed, because they govern all economic situations and models and are immutable.
Those laws said and still say that you can of course go ahead and speculate, but the restraint on doing so is obvious: If you are wrong, you lose. Creative destruction and all that.
And thus my conclusion is that much of our current problem isn’t that the losers don’t want to accept that—of course they don’t and never did. But that as a *society* we don’t want to accept that either. We simply don’t think people should lose anymore. In essence we’ve accepted the goal of today’s big capitalists—from the bankers to the Rush Limbaughs: They want to be half capitalists and half communist Privatize gain, but socialize losses.
So we directly bailed out lots of the biggest boys, which was the biggest crime of all, but we are also right now continuing to bail out everyone in the stock market with Mr. Bernanke’s multi-*trillion* dollar efforts to keep it artificially high. Artificially rewarding, that is.
And the lesson thus not learned is that speculation is risky. Indeed the lesson continues to be that *not* speculating is stupid. That so long as it is done right, speculating is the right bet.
Granted, this is not just a matter of a shift of sensibilities about risk: The problem for a non-speculating concern is that while it’s competitors *are* speculating and winning they are struggling.f
But this is just all the more reason to never ever interfere when speculators get their asses handed to them. *Especially* when it’s just a little correction (like bailing out Mexico some years ago to save a few Wall Street bucks). Because eventually then you’ll have *so* many stupid speculations coming a cropper that you then hear the cries that the whole system will crash if you don’t rescue all the dummies from their bad bets.
And all the non-speculators never go out of business because their competitors are successfully speculating. There’s always enough sensible non-speculators around. But they sure as hell *do* all go out of business if the government steps in and saves the speculators when they lose too. Because you’ve now changed the logic: Why *not* put your money on a speculative concern if they are not going to be allowed to fail? It’s now positively *stupid* to put your money in non-speculator: In exchange for lesser rewards you get precisely nothing more in security. Indeed you get less.
And that, it seems to me, is exactly what happened. Greenspan especially jiggered the interest rates constantly to keep the debt-fueled stock market going. And people responded logically; they borrowed like crazy and speculated like crazy.
No “new” thinking is needed I don’t think. The “old” laws of supply and demand and risk and reward still apply, because they are immutable. What’s changed is our belief that our brains or our emotions can change the immutable. That because we are so smart we can outsmart those old laws, or that because we so much hate the downside of those old laws that we can escape them.
And despite the great, ominous wake-up call we had in 2008 we are *still* thinking and feeling this way, and still deforming our entire system due to same. So we are not even anywhere near cresting the learning curve, indeed, we are just digging the hole that got us to into 2008 deeper. We haven’t even *spotted* the curve yet.