I’ve fired off the following commentary:
“In E.J. Dionne’s statist Emerald City fantasy world, the great and powerful Oz, exemplified by the Goldman capitalist Fabrice "Fabulous Fab" Tourre, has wreaked economic havoc under “our deregulated financial system [of] contemporary capitalism”. Nowhere is the role of government interference examined. Instead, by omission, Mr. Dionne wants us to pay no attention to that man behind the curtain – the government’s political and bureaucratic wizards who pull the levers that control the financial industry and manipulate the markets through such mechanisms as Fannie and Freddie, the FDIC, mark-to-market accounting rules, explicit and implicit mortgage guarantees, the government licensed and competition-protected rating agency cartel, the CRA, the FHA, affordable housing crusades, overt and covert pressures on banks to increase low-income lending by lowering loan standards, too-big-to-fail taxpayer bailout policies, the perverse inversion of normal market incentives through socialization-of-losses policies, and that mother of all culprits – that funny money machine called the Federal Reserve.
“Everywhere one looks, one sees the intrusive hand of government. Yet, in his Land of Oz, Mr. Dionne manages to blame capitalism. How? By employing a fallacy – the equation of capitalists with capitalism. Mr. Dionne simply holds up “a few investment bankers” as a straw man labeled “contemporary capitalism”. But “capitalists” can exist under quasi-socialist systems such as Bismarck’s Germany, Mussolini’s Fascist Italy, Hitler’s National Socialism, or our very own welfare state mixed economy. Capitalism, the political-economic system based upon the separation of state and economics and which rests on a foundation of individual political rights, is nowhere to be seen in American finance except for a few fragments here and there.
“The financial crisis is a monumental failure of the regulatory state. It occurred within the context of the most heavily regulated American industry governed by a central bank money monopoly. Any objective examination of the meltdown’s causes should begin with an examination of government. But not for Mr. Dionne, who wants to beat the drum for ever-stronger government control. Instead, he simply follows in the glorious tradition of George W. Bush (‘I had to abandon free market principles in order to save the free market’) … more regulations, more controls, more socialism, in order to “save” capitalism from socialism.
“While private investment banks like Goldman-Saks present a capitalistic-looking face on the financial crisis, the primary and ultimate causes trace straight back to government interference into the market. The toxic financial instruments peddled by irresponsible investment banks were the logical consequence of decades of politicians’ attempts to artificially expand homeownership through governmental coercion. It’s long past time we recognized that the great Oz is merely a mirage, and took a hard look at the political wizard behind the curtain.”
Posted 4/29/2010 6:11:02 PM
What you would find, I might add, is a good little government man frantically pulling the levers of government control, who happens to be just a very bad wizard.
Notice Mr. Dionne’s early statement: “Capitalism has not taken a hit like this since Mr. Potter made his appearance as the evil banker in ‘It's a Wonderful Life.’ ” This Leftist and I have at least this in common: We both recognize that classic as a virulently anti-capitalist movie. Mr. Dionne’s final sarcastic sentence reads: “The surest way to create socialists is for everyone to experience the economic consequences of counting only on the goodness in the hearts of Mr. Potter and Fabrice Tourre.”
For a review of “It’s a Wonderful Life” and its relation to the financial crisis and its causes and consequences, see my posts Potter’s Revenge and It’s a Wonderful Life – in Real Life.
E.J. Dionne makes it crystal clear why I wrote those two essays attacking and exposing the exact nature of a favorite American movie classic. As long as profit seeking is equated with “evil bankers” and “goodness” ascribed to the need-based lending practices of the George Baileys of the world, capitalism will continue to be under withering assault. I have been vindicated by a leading authority from the opposing side of the ideological divide!