Conservatives Have a Lot To Answer For

The financial markets are reeling and the conservatives--and Republicans in general-- have a lot to answer for. It's time to call them out.

Of course, some Democrats played along. Not just Democratic politicians but Democratic economists. They need to admit some msitakes also and face the future more honestly.

You can trace the rise of American irresponsibility to the 1970s. The inflation, rising budget deficits, soaring oil prices, and unimaginably high (nominal) interest rates had deeply soured Americans on government solutions. Wages were barely keeping up with inflation, and typical workers thought they were falling behind, as food and gas prices rose faster than any others.

In fact, economic growth slowed dramatically, adjusted for inflation, because there was a sharp adjustment downward in the rate at which the nation's productivity grew. Economists still argue about the causes.

Back then, though, such subtleties were not good politics, especially for the anti-government crowd. Republicans in office like President Gerald Ford's Treasury Secretary Bill Simon constantly blamed government spending for just about everything, as of course did the Wall Street Journal editorial page. And it was the age of a rising Milton Friedman, who himself blamed everything on the growing money supply, which was made necessary due to government spending deficits. For Friedman, government was the nation's main danger. Some, especially on Wall Street and at the St. Louis Fed still do blame the growing money supply for inflation, linking it indirectly to government spending, though the theory was abandoned by the early 1980s. Someone should tell Wall Street.

Small wonder that deregulation became the vogue in that decade, also. If government was the problem, much less government, we were told, was the solution. Some deregulation was worthwhile and needed, some social programs did not work well. But the spirit of deregulation was pervasive and irrational once it got its wings.

The Democrats under Clinton aggressively deregulated Wall Street in the 1990s. More to the point, Alan Greenspan, the Fed chairman, personified the deregulatory spirit, and was glorified for a while by Republican and Democrat alike. Let Wall Street alone and it will do us all wonders, and anyone who thought differently was naive, uneducated in free market economics, old-fashioned or just plain silly, if not stupid.

Absurdly high compensation on Wall Street and rising inequality? It's fair and good for all of us because it's determined in the markets and rewards those who contribute most. A ridiculously high dollar? It merely reflects America's economic strength, no matter that it undermines manufacturing jobs.

Such thinking brought us what we have today.

We got financial crises time and again. In the early 1980s with the petrodollar loans to developing nations, later in that decade with the S&Ls, in 1997 and 1998 with the Asian crisis and Long-Term Capital management.

Was there any reform afterwards? No. Were there costs? Huge costs.

We got the corruption scandals in 2000 and2001, and at least we got Sarbanes Oxley, but the

Wall Street community then fought it tooth and nail.

Now we have the biggest mess of all. Thank the conservatives most but also a few Democratic handmaidens. This is a problem made by men and women, not by the laws of economics or of nature itself.

Did the economy benefit from all the financial freedom, despite colossal financial panics, as the free-market economists told us. Median male wages for high school grads after inflation are well below what they were in 1969! Median male wages for college graduates are only somewhat higher than they were then, forty years ago! We never had such slow wage growth before.

These are but one example of failure. The number of people without adequate healthcare, the number in prison, the high poverty rate for children, the disappointing healthcare outcomes despite the highest level of spending by far in the world -- these do not amount to success. We now face runaway medical costs. Our problems are a legacy of a nation turned ideologically conservative, and an economics community far too willing to accept free market dogma.

Let the conservatives stand up and defend themselves.

Comments

[texanna]

It would be great if conservatives would take responsibility for the mess they've created, but I doubt that will happen. Especially, since they've managed to sell to a wide swath of the American public the Great American Myth - that anyone can have a seat at the Rich People's Table if they just work hard enough. As long as those people continue to believe that, they'll continue to believe the conservatives' obfuscations and won't instead hold them accountable for the problems the conservatives have created.

[ranchomerced]

I am a licensed automobile/ motorcycle manufacturer here in the USA; our company could absolutly build a Vehicle that gets 80 MPG; but try to go through the process of testing for all of the "Ralph Nader" safety issues or liability issues because of trial lawyers. The car industry in this country has been squeezed by both the government regulations for safety and the CAFE Standards.. the auto unions and the government both keep us from getting the great cars from Europe like the Smart car by Mercedes Benz or allowing a company like myself to market a car that may not be that safe but could blow the doors off (Economy wise) anything produced here in the USA. It is very frustrating.

[texanna]

Oh please! Explain how the foreign automakers are doing so well in your market. It's not because of government regulations regarding their products, since they are subject to the same regulations in order to compete here. No, it's because they don't have to figure health care as part of their CODB. So, why don't you rail against the real problem instead of parroting NeoCon talking points that we're all wise to by now. I'll bet you are against universal, single-payer health care, aren't you? Probably heavily invested in PHARMA and Big Insurance, those two inevitable growth industries in America. Guess you can see where my frustration lies, huh?

[Malarcus]

"Let the conservatives stand up and defend themselves."

Yeah, good luck with that.

[willo]

Conservatives have always seemed to consider people who made decent wages and benefit's in manufacturing their enemy. Well looks like they won. They've destroyed it, know what?

[dolphy]

The problem with conservatives is they only want to conserve whatever makes them easy money. Conservatives DONOT have any vision at all. As proof that we are being left behind because of these dinosaurs, read this:

The irony is too rich to leave unsaid: A leading oil producer invests billions in carbon-free energy while a leading consumer of fossil fuels - the United States - continues to subsidize Big Oil while while offering only tepid support for green technology. It is inevitable that climate change will foster the rise of renewable energy - the only question is which countries and companies will profit from the new energy economics. It is entirely possible that the U.S. will trade energy dependence of one kind - on Middle East oil - for another - on Middle East and European solar technology - in the era of global warming. It’s no coincidence that most of the solar energy companies with contracts to build utility-scale power plants in California and the Southwest have overseas roots - Ausra hails from Australia, BrightSource was founded by American-Israeli pioneer Arnold Goldman, Solel is based in Israel and Abengoa is headquartered in Spain.

Torresol plans to build solar power plants using a technology it calls a Central Tower Receiver system. It’s similar to technology used by competitors like BrightSource in that fields of mirrors called heliostats focus the sun’s rays on tower that contains a receiver. In this case the receiver is filled with salt which when heated vaporizes water to create steam that drives an electricity-generating turbine. The company says it intends to have 500 megawatts of solar electricity online by 2012.

[WIpatriot]

"Conservatives Have a Lot To Answer For"

Sorry, Jeff, they already said they can't be held accountable, so that's that.

[gator80]

I am conservative and I will stand up! (I hope the group here will respond with intellectual honesty and not with cheap insults.)

You are misrepresenting Friedman. He did not blame ‘everything’ on a growing money supply. He said that inflation was a monetary phenomenon. By the way, that was revolutionary at the time but is now completely accepted (it has not been ‘dispelled’ as claimed in one of the comments).

Friedman’s concern regarding the government went beyond inflation, to the way government interferes with individual liberty. I have seen comments that the United States is not in fact a free market. Sadly that is true. But it’s actually not a black or white situation. A market can be more or less free. There is considerable empirical evidence that the freer the market, the better the economic performance, which means the better the standard of living for the population.

You list a series of negative facts – crises, scandals – without a single positive. Imagine if a company’s annual report only listed its expenses – it would look pretty bad. But the big picture is overwhelmingly positive. Compare the US to any other economy. And look at other countries where free market reforms are lifting millions out of poverty (India, East Europe, to name a couple).

[dadw5boys]

Freidman "THEORY" was that if all regualtions were dropped and Capitalsim ruled the lowest price for raw materials could be established.

All the rest of this crap is just for those who saw past his theory and how it could make the wealthy the ruling class in America and roll back the America Ecomony to the 1920's and the Guilded Age for the wealthy.

[dadw5boys]

This comment is pending approval and won't be displayed until it is approved.

Freidman "THEORY" was that if all regualtions were dropped and Capitalsim ruled the lowest price for raw materials could be established.

All the rest of this crap is just for those who saw past his theory and how it could make the wealthy the ruling class in America and roll back the America Ecomony to the 1920's and the Guilded Age for the wealthy.

Now destorying the Unions and the American Middle class is what the Hertiage Foundation and the NEW WORLD ORDER want. The same Members in both groups.

[LeftRight]

The freer market that you are claiming is good is what resulted in the '30s Great Depression, and what is fueling this current recession/depression.Any claim that the markets need to be freer needs to be looked at and show what the regulation is actually DOING! Because the fact is that when a market is regulated correctly, it's better for ALL, by allowing more, and better, competition, cleaner air, cleaner water, more money for ALL the employees, and an infrastructure that won't crumble when the "costs" get too high!

[Photofarm]

Actually look at managed and regulated economies over the last 40 years. Try the Soviet Union and China. China has moved to a more unregulated and free economy. The result is they are the fastest growing economy in the world. Why did China do this? They saw how the Soviet Union failed using a central government planed economy.

The real reason you have ups and downs in the economy is that people do not want to learn from past economic mistakes. People getting over leveraged by easy credit always gets people and business in trouble. It always has, and always will.

Raising tax rates does not increase revenue to government, and lowering tax rates doesn't lower revenue to government. Look at the revenue increases during Bush's term in office. The problem is that the government always spends more than it has, and voters won't vote the politicians out of office that cause the problem.

Look at this years campaign, Democrats are going back to do the same failed policies that got us into the economic mess of the 1970's and they call this " change " . Stupidity would be the right word, not change.

[gator80]

A lot of people believe what you are saying. I don't think it holds up to scrutiny. It has been documented (by Milton Friedman, among others) that the depression was actually the result of government mistakes - restricting the money supply when it should have been expanding, for example.

"Benevolent" regulation is a nice-sounding Utopian concept. In reality there are far more examples where regulation has caused more harm than good - often to the very people it is intended to help. The flaw is that the concept depends on people with some sort of superior knowledge - they must know better than those they are regulating. They must be free of biases and the influence of interested parties. Where do we get those people? In fact, most regulations ultimately benefit a certain special interest. Example: a regulation is passed required that hair dressers be certified. Who does that benefit? If you guessed "existing hair dressers" you understand regulation.

[dadw5boys]

WE CALL OUT THE CONSERVATIVE ALL THE TIME BUT THEY ARE BUSY IN THE ISLANDS MAKING DEPOSITS TO THEIR OFFSHORE ACCOUNTS.

[gator80]

Wow, so the 62 million people who voted for George Bush in 2004 all are in the islands? How come there's still so much traffic?

[alto]

It is absurd to think the forces in a manipulated oil market will drive the USA to a sensible policy before we're bankrupt. Look where we are now. Leadership would require looking ahead 10-20 years and herding the cats in the right direction. Why can't we have that??? There is no force short of the government that can do it.

[leftLibertarian]

Mr. Madrick:

There is no such thing as a 'free market' in America. It is a managed economy propped us by big mommy gummit.

[LeBelAge]

There is no such thing as a free market period. That just some delusional wishful thinking from the likes of Milton Friedman and Ayn Rand followers.

[retreadite]

Bush is NOT a fiscal conservative.

[dadw5boys]

I saw the TOTAL FAILURE of Government when they made Ollie North a HERO for keeping Regean and Daddy Bush out of prison.

Did the American People miss the FACT THAT COCAINE WAS SOLD TO AMERICANS TO BUY ARMS FOR THE CONTRAS?????? Some Americans are still in prison because they bought some of the cocaine; that would have not been available except for their own Government protecting the smugglers.

I gave up on the U.S. Government at that point.

[abbiehoffmansghost]

Gee, you're late to the game. I gave up during the Nixon administration but I was holding on by a thread after November 22, 1963.

[dadw5boys]

Well I was in Vietnam during the Nixion torture of America. Sorry I missed that but I was busy dodging bullets.

[joebaggadonuts]

But you had 5 boys. It's time to take the government back. For them.

[joebaggadonuts]

Now that Fallon is gone, they can start another war and make us forget about this little thing called the non-military economy.

[GreedyOldPsychopaths]

Good Jeff, you fingered Milton Friedman. Monetarism may have been dispelled in the '80s, but Freidman's "free market" mantra lives on in Monetarism II (New Classical Macroeconomics) and Supply-Side Economics. Greenspasm has long been considered a Monetarist and Big Ben had a crush on Milton in his younger days.


You might consider adding F. von Hayek to your list along with "Gordon Gekko" type WS Robber Baron characters (Ivan Boesky, Michael Milken, Sanford Weill, Rupert Mordoch, etc ad naseum), Jimmy Carter and Bill Clinton. Don't give the democrats a free pass Jeff. Both Carter and Clinton did considerable damage along with Ray-Gun's Privatization and Bush I and Bush the Lesser.


"The Politics of Greed" are not partisan, their class. Good golly I miss Molly (Ivins).

[dadw5boys]

Friedman only ecomoinc theory is that by destorying all regualtions and allowing capitalism to rule the world the basic and lowest price for the raw materials could be established.

He never mentioned that this was a stupid process that will destory the lives of millions of people while making the wealthy the permenate ruling

[gator80]

You must have read a lot of Milton Friedman, eh?

[LeftRight]

yeah, just like Marx overlooked the fact that while the economy was changing from capitallist to communistic in the hearts and minds there would be people in charge, and in fact ABSOLUTELY in charge.

That's the thing about the theories of gov't other than democracy, and the methods of economy other than regulated capitalism. They fail to take into account the fact that PEOPLE are involved!!

[dchavern]

Yes, and I can't wait to get back to the liberal, Big Government glory days of the 1970's. National malaise here we come!

[ImmanuelGoldstein]

Hey dude, the government is ALREADY bigger that it was in the 70's. The last 25 years of conservative ascendancy has done NOTHING to reduce the size of government. You know why? Because Americans, even conservatives, DON'T WANT SMALL GOVERNMENT!

[LeftRight]

Do you honestly think that things are better now than they were in the 70s? Considering that household income has been stagnant since then, in spite of an 80% increase in productivity, and inflation has been through the roof, and gov't oversight of corporations has disappeared, allowing those same corporations to poison us, and underpay us, and steal from us, and give themselves tax breaks during the same time. Big gov't is not always the solution, but it's NEVER part of the problem!

[HippieChick]

Big Government of the 1970s? The government of the 70s was nothing compared to the loss of freedom and economic security we have experienced in recent history. The neocon version of economics is rapidly destroying this nation and its people. We survived the 70s and eventually prospered as a nation, but I'm not so sure we will survive the damage that has been done to our economy and our lives since the war party took over. If this nation continues to exist, my great grandchilden will still be struggling with the debt incurred through the "leadership" of George W. Bush. "National malaise" indeed.