Today, in the Süddeutsche Zeitung online, an editorial by Heribert Prantly which makes, among others, the following point:
In der Spitzenpolitik wurde dieses Referendum diskutiert, als habe Premier Papandreou vorgeschlagen, die Demokratie in seinem Land durch ein russisches Roulette zu ersetzen – und als gelte es daher, dem Premier die Waffe wieder aus der Hand zu winden; das hat man denn auch getan. Dabei hatte Papandreou nichts anderes versucht, als die Demokratie in ihr Recht zu setzen: unzulänglich sicherlich, undiplomatisch, ohne zuvor an Angela Merkel und Nicolas Sarkozy wenigstens eine SMS geschickt zu haben.
Er hätte sein Vorhaben früher ankündigen, es besser vorbereiten, es hätte Teil des Euro-Rettungspakets sein müssen. Aber auch mit der falschen Verpackung und falsch dargereicht bleibt eine Medizin eine Medizin; man muss sie besser einsetzen, zur richtigen Zeit und in richtiger Dosierung. Eine Volksabstimmung ist kein Allheilmittel, sie ist aber auch kein Gift. Wer in einer Demokratie das Volk, den Demos, befragen will, ist zunächst einmal kein Narr, sondern ein Demokrat.
Or, as I translate it:
In senior political circles, this referendum was discussed as though Premier Papandreou had proposed replacing democracy in his country with Russian roulette, and as though it would therefore be appropriate to wrest the weapon out of his hands, which was in fact what was done. But in acting as he did, Papandreou had sought to do no more than give democracy its due — inadequately, to be sure, undiplomatically, and without having so much as sent Angela Merkel and Nicolas Sarkozy an SMS beforehand.
He should have announced his plan earlier, prepared it better, it ought to have been part of the Euro rescue package. But even in the wrong wrapper, and improperly administered, a medicine remains a medicine. One need only introduce it more properly, at the right time, and in the right dosage. A plebiscite is no cure-all, but neither is it a poison. In a democracy, he who wants to submit a question to the people, the demos, is first and foremost not a fool, but a democrat.
I agree completely, and can only add that it never ceases to amaze me how thoroughly people who consider themselves the intellectual and moral elite of their respective countries, the custodians of our modern, post-industrial civilization, discount this simple truth. Poke them a little, and none of them actually believes in democracy. That’s their right, I suppose, and no doubt they have their reasons, but I’d have more respect for them if they didn’t expend so much energy trying to convince me otherwise.
Fiat Currency. Fractional Reserve Banking. Collectivism. Curse words as familiar these days on the Intertubes as socialist or liberal used to be at Baptist church suppers. Disciples of the Austrian Holy Trinity — Hayek, Von Mises, and Rothbard — are everywhere these days, and everywhere eager to counsel us that any houses we build in the future must be paid for, not with electrons and promises, but with actual money — you know, hard money, money you can bite down on, money that you can toss up in the air like Scrooge McDuck, and actually feel it hit you on the head when it comes down. They’re having none of this stuff that any government can conjure on a computer, and any central bank can issue. They claim that civic virtue is what’s driving them, but I suspect that they’re just out of breath chasing events that they don’t understand, and consequently need a rest more than they need our attention.
Yes, hard money would certainly slow things down for a time. People who presently have access to hard money, or can imagine themselves having access to it in the future, think that this would be a Good Thing, inasmuch as it would a) give them more leisure to lecture us on eternal verities, and b) keep the political fantasists and other rabble at bay until better security measures could be devised.
They’re wrong, of course. It’s not just that they’d have to put down the masses of people pissed at being forced to give up their iPads and go back to grubbing on somebody else’s acreage all day with only a dish of oaten gruel as their reward at the end of it. They’d also have to figure out how to finance a dozen nuclear-powered aircraft carriers and accompanying battle groups to replenish the gold they’d frittered away producing goods that no one but themselves had enough hard money to buy.
So what else is on offer, and who’s offering it? These days, business as usual, of the kind prescribed by Wolfgang Schäuble on the far side of the Atlantic, or Hank Paulson closer to home, has about it the unmistakeable odor of wishful thinking. Slightly left technocrats agree, and offer us Keynes instead. They swear it’s because his theories work, but I suspect that at least part of their enthusiasm arises from the notion that adopting his theories would put them in charge again, which for them, if not for us, is reason enough. Revolutionaries are still trying to exhume Marx — brush the grave-mold off his burial suit, put a little touch of rouge on his cheeks, they say, and he’s good to go again. With all due respect for what he accomplished in his day, I doubt it.
We need to do better than this. What do we mean by freedom? What do we mean by prosperity? Is capitalism — any form of capitalism — really essential to either? Who’s minding the store anyway? I can’t really blame the Hayekians for asking similar questions, but when it comes to answers, I’d as soon consult my local astrologer.
Tinkering…. As good a word as any for a dearth of political will. I hate to bash Brad DeLong, who’s one of the good guys, and doesn’t really deserve a snarking, but he’s a classic case of the technocrat who believes in all the seemingly correct policy solutions, yet is left as helpless as the rest of us by the madness of Realpolitik, not to mention the madness of people who wouldn’t recognize realism if it bit them in the ass.
Here’s Professor DeLong, who’s as smart as we make them these days, waxing ironic:
And here we reach the limits of my mental horizons as a neoliberal, as a technocrat, as a mainstream neoclassical economist. Right now the global market economy is suffering a grand mal seizure of high unemployment and slack demand. We know the cures–fiscal stimulus via more government spending, monetary stimulus via provision by central banks of the financial assets the private sector wants to hold, institutional reform to try once gain to curb the bankers’ tendency to indulge in speculative excess under control. Yet we are not doing any of them. Instead, we are calling for “austerity.”
It may make for decent theater, but irony is hardly the best defense against the limitations of the intellect in situations like the one we all find ourselves facing today. Neither is cognitive dissonance, as in the governor of Wisconsin — Wisconsin, for Christ’s sake — threatening to use the National Guard to shoot public employees who object to being beggared by a nasty right-wing ideologue. Or, if you’d rather read about the problems of furriners, this: The Arab World’s Triple Crisis.
If Professors DeLong and Krugman can’t handle the political implications of our manifold current crises, who can? My answer is that no one can, not and remain unscathed. Our future is no longer strictly a mattter of policies good or bad, and no matter how much we might wish it to be otherwise, the outcome has become unpredictable.
If a just and merciful God actually ruled our modest corner of the universe, this might well be the last headline in the last newspaper before the world’s presses are shut down forever. The justice of it is obvious. Having devoted the last twenty years of his pitiful life to a self-indulgent campaign against the very foundations of human civilization, it’s only fitting that His Obesity should be compelled to prove the last full measure of his devotion to the cause. The mercy, of course, comes at the end, in the blessed silence which descends on us as his bones are being picked clean, and we’re at long last left alone in the ruins to ponder our own collusion in his ascendancy.
Whatever you may hear about our essential Godlessness, never doubt for a moment that we secular humanists have our own vision of End Times. It may not be as emotionally satisfying as the one being marketed by our fundamentalist Christian brethren, but unlike them, we have actual evidence to offer for ours: here,here, and here.
So, while Rush blames the decline and fall of the American empire on negroes and homosexuals, on feminazis and San Franciso liberals and socialists, and anoints himself with Wal*Mart oil in anticipation of being crowned our first Social Darwinist emperor, I like to imagine him subbing for Montgomery Clift in the climactic scene of Suddenly Last Summer. (Tennessee Williams may have been abhorrent to Real Americans, but he more or less wrote the book on many of our latter-day hypocrisies.)
I plead guilty to a lack of charity toward Mr. Limbaugh, but if we really are destined to face the Four Horsemen in the not-too-distant future, it would be a lot easier for me to greet them with bread and salt if I knew that he’d already gone to his reward. Mea Culpa.
If the government is going to give billions, even trillions of our tax dollars to the banks, we should own them. Nationalize the banks.
When progressive Democrats say this, what they usually mean is that the government should take over the large investment banks and bank holding companies which have been the recipients of tax-funded government bailouts — Citigroup and Bank of America, for example — restructure them, and then continue to operate them in the public interest, either through direct ownership of a majority stake in each company’s equity, or after repatriating them at a fair price to a new, and presumably more responsible group of capitalists, through stringent new regulations, and even government seats on their Boards of Directors. The presumption, of course, is that in recent years these banking conglomerates have been run, and in most cases continue to be run, solely in the interest of the bankers and their shareholders, with little or no regard for the public interest.
Such a plan sounds like a good idea; certainly Stiglitz and Krugman seem to think so, and they know far more about such things than most of us do. The difficulty I have with it is that as far as I can tell, there’s little practical difference these days between the government owning the banks and the banks owning the government.
Strictly speaking, I’m making a political observation here, not an economic one, but consider just one recent event, the defeat of the Durbin Amendment in the Senate last Thursday. This amendment to the Senate Housing Bill (S.891) would have brought the bill into conformity with a bill passed earlier by the House by allowing homeowners facing foreclosure on their homes to seek a court-administered adjustment of both the interest and the outstanding principal on their loans. Among the most significant of the groups lobbying against the amendment was the Mortage Bankers Association, which celebrated its victory in this widely linked video:
Consider also that one of the members of the board of the association is an executive of Chase Bank, a division of JP Morgan-Chase, and another is an executive of Wells Fargo Bank, each of which received a federal bailout package of $25 billion dollars. Finally, consider that one of the reasons given by the association for its opposition to the amendment was that it would create a moral hazard, meaning that it would encourage people in the future to buy houses that they couldn’t afford, and legally burden their mortgage bankers with the loss when they were unable to make their payments.
Frankly, when offered by an industry whose practices in the past decade came very close to destroying the entire global economy, this doesn’t even pass the smell test. Bankers who overindulged in risk, were salvaged by billions of dollars of tax-supported cash infusions, and then spent millions of those dollars lobbying senators to defeat a bill which would have afforded similar relief to ordinary homeowners have an amazing amount of gall, it seems to me, to even think of offering opinions on moral hazard.
Let me be perfectly clear. In talking about the series of events leading up to the defeat of Senator Durbin’s amendment, I’m not arguing guilt by association, take no particular pleasure in bashing what some have called greedy plutocrats, and have no need or desire to rely on some sort of post hoc ergo propter hoc explanation for why the vote went the way it did.
The relationship between bankers, federal bailout money and lobbying — which I’m by no means alone in pointing out — may in fact be purely coincidental. I’m even willing to accept the proposition that these folks genuinely believe that they’reacting in the public interest, despite the obvious appearances to the contrary.
The problem is that, from my perspective, there’s no public in their version of the public interest, there’s just them and the people they know and do business with — those who, in a more combative time, we might have called their class — and outside that familiar circle, they see only an undifferentiated and faceless mass which includes most of the rest of us. In other words, our needs, let alone our opinions, aren’t a part of the public interest which anyone in their position is obliged to take seriously.
More to the point, we have no way at present — absolutely no way — of making them do otherwise. The idea of democracy, that there’s some sort of virtuous path between the will of the people and the actions of its putative representatives, has no force in a society which treats money as the legal equivalent of speech. If anything has become obvious in the United States since the end of WWII, it’s the fact that money is now the only effective form of political speech.
We listen to candidates tell us what we want to hear, we vote for them, and then when they get to our state capitals, or to Washington, they do what people with money tell them to do. To be fair, if they refuse, if they take a broader view of the public interest, the people with money won’t provide them with the means to speak to us come the next election, and in our era, they literally have no other way to speak to us without it.
There’s plenty of blame to go around for this, but in the end, most of it is ours to shoulder. Fundamentally, this is, as I’ve already said, more a political burden than an economic one, one which we’ll eventually have to accept no matter what we make of the economic vices and virtues of global capitalism and the corporate state. Those vices and virtues are real enough, and will, I hope, provide an interesting subject for more than one future post.