(This article was originally posted in January of this year. Unfortunately, it’s just as relevant now as it was then.)
If you are not an economist, and you want a concise explanation of what is happening in the world of risky mortgages and failing financial institutions, let Robert Kuttner of the American Prospect explain it to you. (Thanks, Dad, for bringing this to my attention!)
The article is remarkable not only for its clarity, but for its framing. New Deal good! Free-market fairy tales bad! Amazingly, regulation is not the worst thing that can happen to an economy, and just lowering interest rates does not magically infuse the system with high-value cash. Who woulda thunk it?!
To me, Business as an entity is like a child experiencing its “Terrible Two’s.” All of a sudden, “NO!” is the only word the child seems to be able to say. Although the Terrible Two’s are difficult for parents, they are also a crucial time for setting limits and imposing discipline. Is the child intrinsically bad? Of course not, but it needs to learn morality. Without the proper guidance, it will develop not into a responsible member of society, but instead into a spoiled, selfish brat. (This eventuality may occur despite the best efforts of the parents, but that doesn’t mean the parents are excused from trying.)
And that’s where conservative economic policy (what Kuttner calls “free market fairy tales”) fails us. Business is not intrinsically bad – in fact, it can be very, very good. But Business has no moral compass – it exists purely for profit. Without strong limits and regulation, it will become an anti-societal force, and that’s just what has happened.
The conservative movement has been very, very good at selling the idea of unregulated markets by hooking it to the mythos of the American cowboy. He’s out on the range, striking out on his own, no one to tell him no, singing “Don’t Fence Me In.” How oh-so-very-manly! Like Robert Kuttner, we liberals need to re-frame this debate. The free-marketeers are not cowboys. They are the robber barons; the fat cats who light their cigars with $100 bills; the guys who take your hard-earned pension and use it to buy hundred-foot-yachts for their buddies, then escape to a country with no United States extradition, laughing all the way to their Swiss Bank.
Nobody likes those guys.