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As Long as We Remember...

October 2, 2008

Unfettered Capitalism = Disaster

Tony Soltero

One of the mantras of the right is that free markets only function properly in the complete absence of government intervention. Deregulate everything, get out of the way, and let the market work its magic. It's as essential to conservative dogma as war fever and religious fundamentalism.


So, it's more than a little ironic to observe that Wall Street, the very symbol and icon of free-market capitalism itself, is now begging for a government handout to "save the economy." When a struggling family does this, they're nothing but freeloaders and welfare leeches; when AIG does it, it's essential to the integrity of the financial system.


There's a certain patheticity to seeing these stalwart self-made executives demand that they be allowed to feast at the public trough, or else we're all going to DIE DIE DIE. It's even worse when those demanding a bailout are the same ones who insisted a few short months ago that everything in the banking industry was just hunky-dory.


And it's trebly outrageous when the parties demanding a bailout get to dictate the terms of their rescue. After all, they're the ones who got us to this point to begin with. Does a convicted murderer sit on his own parole board?


But as infuriating as the particulars of this bailout measure might be, in whatever form it ultimately gets passed, there's a lesson here for the free-market fundamentalists. The lesson is simple: right-wing economic theory does not work. National economies cannot function without some form of state involvement. You can't have a football game without referees.


The current financial crisis was not inevitable. We haven't gotten into any situation nearly this precarious since the Great Depression – an era in which many regulations and protections were put in place precisely to avoid a repeat of that spectacular failure of capitalism.


Franklin D. Roosevelt's administration instituted banking and investing safeguards to place checks on the unvarnished greed that fueled the speculative fever that ultimately triggered the crash of 1929. And ever since, our economy has been able to absorb multiple shockwave – World War II, the oil crunches of the 1970's – without collapsing. While the storms might be thick and heavy at times, the levees have always held. Until now.


Why is that? Well, Ronald Reagan rode into office in 1980 on a typically simplistic "government is too big" platform, and then proceeded to apply his deregulatory magic to the savings and loan industry. A few short years later, American taxpayers found themselves on the hook for a $200 billion bailout of the thrifts.


You'd think that fiasco would slow the deregulatory freight train, but the ideologues just kept on going. Bill Clinton, in one of the worst acts of his presidency, signed the bill to repeal the Glass-Steagall Act, the law that had put the brakes on reckless banking activity. Texas Sen. Phil Gramm, perhaps the single individual most responsible for our current mess (and a man who, in a just world, would be living out his final years in abject poverty), slipped in some extra deregulatory provisions that effectively turned banks into casinos.


And then came George W. Bush, with his eight-year avalanche of corporate tax cuts and even more deregulation.


The results speak for themselves. Now, we the taxpayers are being called upon to bail out millionaires. And if we don't, they'll wreck the economy.


This is pure blackmail. And make no mistake, it is conservative economic policies that got us to this point. If you take the referees out of the football game, eventually some players get hurt. Badly.


It's time for us to stop lying to ourselves. We need the government to step in and re-institute the regulations that served our economy well for over 60 years. Unfettered capitalism is a path to disaster – we should never again let any corporation expand to the point where it holds this much power over our national economy.


And that's where we are now.


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