2009 March 25 Wednesday
Ross Douthat Expects More Elite Power From Financial Crisis
You might think our elites have discredited and weakened themselves as a result of the on-going financial debacle. Our biggest banks have either collapsed or have been bailed out with central bank and government money. We are descending into probably the biggest downturn since the 1930s Great Depression. Government-Sponsored Entities (GSEs) such as Freddie Mac and Fannie Mae played large roles in causing the disaster (egged on by Congressional critters who even now point the blame elsewhere with a total lack of shame). So time for a reduction in power in the hands of central governments and international institutions? Fat chance. Ross Douthat expects more centralization and more global regulation and control in the hands of our elites. Less democracy.
If the Western leadership class survives the current crisis, after all, the lesson they're going to draw from it is relatively simple: We must never let this happen again. And while that impulse could be a spur to greater decentralization and democratization, it's more likely to be produce greater supranational regulation, more expansive bureaucracy, and a more hand-in-glove relationship between big government and big business than existed before the crisis. In theory, one way to respond to a "populist whirlwind" would be to make governments more accountable to the voting public. But in practice, I suspect, the more likely response will be to build stronger dikes and firewalls against the dangerous and unpredictable masses, producing post-crisis institutions that are even more insulated from democratic accountability than they were before.
Of course we need to keep holding elections. Those elections bestow legitimacy on our rulers.
I think Holman W. Jenkins of the Wall Street Journal does a nice job of showing us what large segments of our elites think about our (us, the masses) role in this mess. If only the experts had not involved elected office holders in the development of solutions all would be well according to Jenkins.
Never was it a good idea to have a financial crisis in the middle of a presidential election. Involving Congress was a mistake. Letting the technical matter of keeping the banks afloat become a political football was a terrible idea. Letting our willingness to deploy giant sums of taxpayer money become the measure of credibility was a disaster. Letting all this be sold on Capitol Hill amid shrieks about the country collapsing into a Second Great Depression was a confidence killer across the economy, which until that point had held up well.
It's possible in hindsight to imagine a better course. Had matters simply been left in the hands of the Federal Reserve and fellow bank regulators, the "crisis" might have become fodder for little more than future late-night reminiscences by retired bureaucrats, pleasuring themselves with how closely the world came to burning down without the public ever knowing it.
Really, the Mandarins know best. I think we are going to become more like China. The upside: you won't need to feel responsible about larger events. You won't have any control over them.
I don't know about that "China" analogy...
My strong impression is that nearly all the top national leadership in China is reasonably patriotic and working towards what they plausibly perceive as the nation interest. Sure, they skim a few percent of the national wealth off the top for themselves and their friends and relatives, but that's pretty universal, at least outside of Scandinavia.
By contrast, I'd say that most of America's top national leadership---both political and financial---is better characterized as being a bunch of greedy and incompetent criminals. Their activities seem only very loosely associated with what might be remotely considered "the national interest."
So I doubt we're becoming more like China. Now Argentina's a different story...
Before you sign off on the Chinese leadership as warm and fuzzy, you might want to take a look at this (from Asia-Pacific News):
Beijing - The number of Chinese political prisoners rose in 2007 to its highest level in eight years, according to a report published Monday by the US-based Dui Hua Foundation.
According to report, arrests in China for 'endangering state security' rose from 561 in 2006 to 742 in 2007.
In the Chinese legal system, this category of crime (which in 1997 replaced 'counterrevolution') includes subversion, espionage, and so- called 'splittism' and the incitement thereof. The foundation said these laws are aimed at squelching dissent.
'These numbers remind us that in spite of all of the information that comes out of China about the government's crackdown on politcal dissent, for the most part the arrests are taking place out of the public view,' said Joshua Rosenzweig, manager of research and programmes at the Dui Hua Foundation.
'Even after all of our research, it turns out we still only know the names of two or three per cent of those being arrested,' he added.
Or have a chat with the Tibetans or the Uighurs about their friendly relations with the Mandarins in Beijing.
"My strong impression is that nearly all the top national leadership in China is reasonably patriotic..."
Only partly right, RKU. The word you're actually looking for is "nationalistic," and it's a trait our so-called leaders would do well to adopt, since I think "patriotism" as it's defined by Webster's and understood by us non-elites is a little too much to expect.
Our elites consider themselves "citizens of the world," or "transnational," or even "post-American." Obama told us he was a citizen of the world even before he was elected. Does the word "patriotic" spring to mind when you thik of either Obama? Nope, I didn't think so. How about Chris Dodd, or Barney Frank? Ted Kennedy? How about Oprah? Name one really big entertainer who comes off as patriotic...well, OK Clint Eastwood. What about the business world? Bill Gates? Warren Buffet? George Soros (yes, he's a naturalized American citizen)?
For probably the first time in our country's history, our political class is not just indifferent to the citizenry, they actually despise us. In their view, we are not their constituents, to whom they have a fiduciary responsibility, we are their subjects, serfs to be controlled. Once you understand that, it becomes obvious why they will not enforce our immigration laws and borders - they see poor, uneducated, docile and unsophisticated Mexican peasants as preferable to uppity, demanding middle class Americans.
I really feel bad that we not going to have more socialism (except for the wealthy) after this crisis.
That means no AMS-åtgärder, no highly progressive taxation, no universal health care, no Swedish socialism (and capitalism.)
I like that idea that the current financial crisis was all due to Congress meddling in macroeconomic matters best left to the Fed Governors and other experts.
Yep, the Bush housing bubble collapse was caused by Congress not letting the Fed unleash its inner Bernanke. And/or preventing Paulson from going postal (in a good way) at Treasury.
Congress is also to blame for Greenspan's reckless EZ money policies.
Also AIG's merry CDS-writing.
Also Moody's etc. rating swill as AAA.
Also Bush's pressure to originate more loans to soon-to-be-solidly-Republican Hispanics, no matter how dodgy.
We should at least do that august institution the honor of blaming it for its actual contributions.
Like repealing Glass/Steagall.
Like Fannie and Freddie.
Like the CRA.
Like selling itself for hundreds of thousands in contributions from regulated industries with billions in profits at stake.
The performance of Congress is pathetic enough, without having to blame them for the misdeeds and failed theories of others.
Maybe the elites would not have pushed mortgages on folks who could not afford the monthly payments. Seems to me that that came from the politicians.