Strengthening Constitutional Self-Government

No Left Turns

Not Capitalism . . . but "Crony Capitalism"

. . . is to blame for our current financial woes according to this first in series of articles promised by Terry Jones at Investor’s Business Daily. Jones examines the intersection of politics and the credit crisis and finds a lot of political faces hanging around there--especially in the early 90s--thumbing for a ride. There are a few names with "Rs" next to them. But there sure are a lot more with "Ds." And, of course, there’s the little matter of $125,000 in campaign contributions from Fannie and Freddie going to a certain Presidential Candidate. A figure that makes him second only to Christopher Dodd in the grab.

Discussions - 9 Comments

Below I argued I think we decided that home ownership was a social good. Then we did all that we could, politically and economically, to facilitate home ownership for as many people as possible. The assumptions were various; that home ownership made for a more responsible population, that giving more people a stake in property would stabilize them politically, and for some, that pursuit of property was a basic American right - the American Dream - and that John Locke really had something in the right to property. I think conservatives bought into this idea as a way of getting people away from the lure of welfare. Liberals saw it as a matter of equalizing, leveling, property... No one likes to trash the American Dream. To do so was, is, and will be a disaster, politically. The free market can't work when it's not free, but when it is free, people get hurt and we can't have that, not when those people are voters.

Which I think is root. The cronyism is what follows. It is as inevitable and human as any corruption of anything.

Could we call for a separation of business and state, on the same basis that Jefferson called for a separation of church and state? That is, if they are mingled, the one corrupts the other.

I had one other issue this that might be evident to everyone. There are apparently people in the Middle East, with lots of oil money, who are doing all they can in this situation to destabilize the American economy. The bailout then becomes a national security issue, not just a matter of this cronyism. I don't know if this is true, but it seems plausible and possible.

"Could we call for a separation of business and state, on the same basis that Jefferson called for a separation of church and state? That is, if they are mingled, the one corrupts the other."

Come on Kate, I know I am preaching to the choir here. Not only is this the case but it is damn near the entirety of the case.

Or at least it seems the two themes are well melded in the chapter called "Planning and Democracy" in the Road to Serfdom by Hayek.

"Where, as was, for example, true in Germany as early as 1928, the central and local authorities directly control the use of more than half the national income(according to an official German estimate then, 53%), they control indirectly almost the whole economic life of the nation. There is, then, scarecely an individual end which is not dependent for its achievement on the action of the state, and the "social scale of values" which guides the state's action must embrace practically all individual ends."

In point of fact: "The inability of democratic assemblies to carry out what seems to be a clear mandate of the people will inevitably cause dissatisfaction with democratic institutions. Parliments come to be regarded as ineffective "talking shops," unable or incompetent to carry out the tasks for which they have been chosen. The conviction grows that if efficient planning is to be done, the direction must be "taken out of politics" and placed in the hands of experts--permanent officials or independent autonomous bodies."

I remember reading somewhere that one of the reasons America is so prosperous is that its financial capital (NYC) is distinct from its political capital (DC). The more they intertwine the worse things will be.

That's the ticket - any time that capitalism appears faulty then say that it's not real, true capitalism. Brings back memories!

Since "Cubs fan" is so keen on rejecting the drive by and humorous method of ending an argument (cf. his posts in the Naomi Wolf thread), perhaps he can detail the specifics on how, exactly, what we saw with Fannie and Freddie constituted true capitalism in action?

The assumptions were various; that home ownership made for a more responsible population, that giving more people a stake in property would stabilize them politically, and for some, that pursuit of property was a basic American right - the American Dream - and that John Locke really had something in the right to property. I think conservatives bought into this idea as a way of getting people away from the lure of welfare.

Conservatives may have thought that. The problem was not that thought, but the implementation. Mllions of illegal aliens were allowed, even encouraged, to buy a house. The distinctly non-conservative Bush administration was on board with this insane policy.

That aspect of the current crisis is not getting the attention it deserves. The right prefers to focus it's fire on blacks, since it still imagines that it can buy the Hispanic vote.

Brings back memories!

I'm sure it does, Communist Fan.

Give me a break Ponzi. The drive-by post is your stock-in-trade. And for anyone with reading comprehension abilities past, say, 8th grade, to call me "Communist fan" based on my earlier post, that's just silly. I was actually comparing the slimy slipperiness of the true believer Commies with the true believer Capitalists. Whenever their system gets caught in a grand failure of one sort or another they simply say it's not The Real Thing to evade critique.

Cubs fan, planned capitalism is not capitalism at all. We live in a mixed economic system. It might be possible to live as a capitalist in the US, but I do not see how given the public urge towards regulation since the turn of the last century. Government intervention in the mortgage market in the form of the FMs, and the sort of bureaucratic corruption those entities seem to have fostered does not represent a capitalist model economy. As Julie said, "perhaps he (you) can detail the specifics on how, exactly, what we saw with Fannie and Freddie constituted true capitalism in action?"

You have a point in #8, for me that point being that people are corrupt and will corrupt any system. The good thing about capitalism, in that respect, is that it takes human nature as a given. No one expects a capitalist to show certain virtues like selflessness and everyone is grateful if he does. Honesty will keep him out of trouble with the law and in the long run, is better for business. That's incentive to that virtue and to others. Really. Virtue is good for business.

Communism will not work without selfless honesty and other virtues that are just not evident in human beings on a consistent basis and that selfish inconsistency will break down that system every time. Evidently, there is less incentive to virtue in state systems. Maybe the point is that the law can more easily go after those outside of government, than those within the government who sometimes are the law or can craft the rules of regulation to protect themselves. I'll go with what Steve Sparks said above. Separation of capital from the Capitol is the way to go.

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