18 November 2009


Free markets you say?

I had just made this comparison myself a few hours before I read this. It came up as I was discussing the way political zeitgeists sort of cycle and that one occasion where they didn't cycle normally was post-Hoover. FDR had a democratic hegemony that lasted an extra cycle, with some weakening beginning in the post-war years with Truman at the helm instead. Much of the reason it lasted as long as it did was Hoover managed to discredit things that he didn't actually do when he was in office by wandering around supporting free markets and opposing the New Deal in his post-Presidency. Meanwhile, he'd basically done "New Deal lite", and in several critical areas was further to the left than FDR was (protectionism and monetary policy). They both used the same policies on employment and the supposed manner of wage inflation to combat the Depression. Blithely ignoring that wage inflation resulted in terrible conditions if you had no job and thus couldn't get one because you were not productive to employ at the new wage scale. They both used progressive income taxes aggressively rather than broad scaled tax bases to generate revenues. Hoover's Republican predecessors had broadly reformed and flattened the income tax during the post WW1 recessionary period and allowed wages to fall or rise flexibly (such as they can, wages are always sticky) with the result of an almost immediate bounce back recovery. The case against Hoover's supposed dithering and inactivity relative to his actual methods is very strong. He was adopting policies and swiftly enacting them, with the problem being that they were precisely the wrong policies, not that he was insufficiently vigorous. The Bush years followed much of the same pattern. The difference being that Bush adopted some flowery rhetoric that he was a free-market defender while he was passing things that are anything but and did not wait, as Hoover had the good grace to do, until he was out of office to begin singing those praises as though they were of actual meaning to himself. This attaches a very wide net as to what constitutes a "pro-market" or a free market position in the minds of an often woefully undereducated populace (one which is often already hostile toward free market economics when expressed as real and specific policies).

Until I read Bush's latest remarks, I was content to believe that it was Cheney going out destroying the credibility of markets by announcing that they were the "pro-market" folks and that everything Obama was doing was wrong in the manner of Hoover. I think it is safe to say now that the Bush-Rove goal of a political hegemony is secure. It's just going to be their oppositional party for a long while now. Good work that. If instead they were going out and announcing that these things "nationalizing airport safety, carrying out illegal surveillance of U.S. citizens, raiding medical marijuana clinics, bailing out General Motors, AIG and other companies, and socializing prescription drugs for the elderly" were terrible intrusions of the government upon the market and society at large and mistakes of his administration, then pro-market advocacy has a future. At worst, Bush (and Cheney) should just shut the hell up and not be heard from again for a while if they actually believe the things they say to be true statements worth implementing as policy.

Since it is apparent from their actual policies that they do not believe this to be the case, and thus their advocacy is more interested in political power and not markets, I hold out no significant hopes for markets generally in America. This is in spite of Obama thus far being probably more pro-market than Bush ever was on many issues (other than trade). Curiously, the new bastion of such ideas is probably Europe and Asia, which have been moving progressively to the right on economics for a while now, further still now with the recessions impacts. In some cases, well to the right of even the supposed laissez-faire titan of the United States. Suppose, for the sake of argument that it might be of some benefit if we were to meet in the middle somewhere, even that is hardly likely to happen if we have a population that doesn't understand markets and doesn't trust them because some damn fool went around talking about how great it was when he was President and we had a "free market economy".
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