Sunday, September 21, 2008

McCain Was Really Onto Something

Some thoughts on the emerging politics and policymaking of the economic crisis:

  • The urge to find a scapegoat seems overwhelming, as Glenn Greenwald illustrates. McCain feels your rage: on 60 Minutes he actually described himself as enraged. Everybody does. The question is whether McCain and others "acknowledging" the public's rage will suffice in place of actual punishment...

  • Some are already pointing out that the bailout, representing such a massive government intervention into the economy and characterized by so many of the things Republicans use to scare the public about a bigger government role in, say, health care, will move people toward saying, “If this is socialism, let us embrace it.” At the level of democratic politics, most people would find it more important to have health coverage than to take pride in the fact that our economy is structured slightly (and inconsistently, and thus hypocritically) more like a certain model of capitalism (crony) than it would be if we did national health care.

  • Perhaps the most pernicious and vexing kind of affliction is the kind you can’t fight without badly hurting yourself. That we simply can’t, in a relatively consequence-free way (i.e. without the collapse of the credit markets), let the bad Wall Street baddies reap the consequences of their own irresponsibility—as we’re told Americans should do, mind you, just makes us all the angrier. It also reminds us that we’re all at least indirectly culpable ourselves—in the same way that abusive or neglectful parents of a child who tortures small animals or sets fires might be culpable (and that the child might be shown some degree of mercy as a result).

  • The rational response to this would be to try and change the rules of the game such that this kind of deep corruption becomes more difficult. But the corruption continues to feed the same people who set the rules… thanks to our campaign finance system. John McCain was really onto something when he focused on that: I always thought it was an admirable indication of his faith in the American people to make smart decisions when donors' thumbs were removed from the policymaking scale. That he hasn't said a word about this in the last couple weeks--arguably his single biggest item of "reform" cred--shows just how far he has gone from his tun-of-the-century heterodoxy.

5 comments:

The Navigator said...

I love it when Colbert gets 'enraged'. In fact I keep waiting for him to announce that he's engorged with rage.

It's one thing to flip-flop on a specific policy; it's another to directly reverse your entire philosophical/ideological approach to a field of human endeavor. McCain has always been a hard-core deregulator-at-all-costs on economic issues (on campaign finance and, temporarily, the environment, he moved toward more regulation) and watching him flail around on the financial crisis is almost worth it. Almost.

Feral said...

You can’t hold Wall Street or deregulation responsible for all of this. Blaming Wall Street for being greedy is like blaming NASCAR for not being fuel efficient. Wall Street is built on greed; it is encouraged, it is worshipped, and if you don’t have enough of it, you’re ousted. At the core of the mortgage backed securities problem lies the cultural affinity for Americans to spend more than they have, simple as that. Americans got caught using the Enron accounting method, mark-to-market; count your profit before it is realized, than extend more using the theoretical profit. At any point during your economic proceedings, if the theoretical profit from 5 steps ago dematerializes, Jenga!, the tower comes crashing down. Wall Street was presented with a vehicle for trading and profit, and they jumped on it, no different than the million other collateralized vehicles and complex investment schemes they’ve jumped on before, throughout their history. Nobody complains about, say, Credit Default Swaps, because they work so you don’t have to know what they are. Wall Street got fooled on this issue (obviously) along with everybody else. The real blame lies with predatory lending practices and the rating agencies who assigned an unduly high safety rating to the investment vehicles cobbled together from this crap. But digging deeper, the start of the problem is people reaching farther than their grasp. The problem lies with the so-called “American Way”, where you’re encouraged to always strive for more and, essentially, live in debt, which is one way of guaranteeing that you’ll work your fingers to the bone all your life to keep the big engine that is the American economy going. Encourage people to overextend, and you have a workforce that’ll never stop trying harder and harder. They can’t; they’re in debt up to their eyeballs.

Well, it turns out that that’s maybe not a great thing, after all. Oh well, on to socialism.

David said...

Exactly. Which is another reason why the urge to scapegoat is a little silly: "We're going to punish you for enabling our bad judgment!"

It's interesting to me, as someone who did take out a "responsible" mortgage on a place I could actually afford, working through my own bourgeois middle-class annoyance at the prospect of my tax dollars potentially going to save both the people whose eyes were bigger than their bank accounts (if the Democrats can pork up the bailout, that is), and the lenders that turned 'em loose. My inner Meathead is at war with my inner Archie...

Feral said...

As a silver lining, this does probably mean that since y(our) tax dollars are going towards saving fiscally irresponsible or naive Americans next door, there’s less of y(our) money to go around for killing politically/religiously irresponsible or naive brown folk far far away. We’re saving them here, so we don’t have to bomb/save them over there?..

David said...

Nah, there's always money for wars. That's just how our politics work. Any choice between "saving" Americans and killing other people will always go toward the boom-boom.