Tim Geithner has two faces. This is bad news and good news for those who believe market fundamentalism is responsible for the current fiscal hole we are in, and that climbing out will require a fundamental revision of fundamentalist market ideology.
The bad news, reinforced on this past Wednesday morning when Geithner answered questions at the Council on Foreign Relations in New York, is that when push comes to shove (and push has come to shove) our Treasury Secretary has a market fundamentalist face. He still believes in markets, and thinks that his job is to get them to fix everything, even if that means getting government to help out for a while. But the aim is to restore the status quo ante so that credit flows again and consumers go back to consuming by borrowing, banks regain solvency, and democracy recedes back into the background as an attentive watchdog where shoppers are again more important than citizens.
But Geithner has a problem: capitalism's recipe makes profit the reward entrepreneurs receive for taking risks. The collapse of trust in the global fiscal system, however, means no one wants to take risks anymore. They will take the profits, yes, but not the risks.
I asked Geithner during the Council discussion whether his private/public plan for selling bad bank debt amounted to a scheme to socialize risk: asking taxpayers to underwrite the downside of our stupendous debts but allow private investors to get the lion's share of whatever profits ensue from their sale. He answered me by agreeing that government (us taxpayers) had to take risks in order to save banks from sinking under the weight of their own debt. But it was investors who had to be rewarded, or they would never buy back into the market. In other words, yes, socialize risk but keep the profits private!
This approach is little more than a vigorous version of Bush's policies, and seems to accord not only with Geithner's Wall Street inclinations, but with President Obama's liberal market outlook. It wasn't an accident that his key economic advisor during the campaign was market liberal Austan Goolsbee; or that economists like Joe Stiglitz and Jeffrey Sachs have no role in his administration.
Yet Geithner showed a second face at the Council, as well, and this is the good news. For he said repeatedly that the greatest danger of our time was not government doing too much but government doing too little; that recovery would require persistent experimentation; that if market solutions and public-private partnerships fail, other option must and will be explored. Like the president he serves, Geithner may believe in markets but he is a pragmatist, a progressive and a Democrat, and seems willing, if market strategies fail (as they will), to abandon them in favor of whatever works.
This is the difference between true fundamentalists for whom ideology is always trump, and pragmatists who like market strategies but are ultimately committed to the public good in accord with the mandate of social justice. The good news then, in case you missed it, is that President Obama and his Treasury Secretary are Democrats, and this actually means something.