I seem to have the same argument over and over again these days. Someone of the conservative or libertarian ilk tells me that government intervention in free markets is wrong and that we should have just let all those banks fail. In response, I say something like, “While I wish the takeover was done better, the economic carnage created by such an event would be simply unacceptable.” They come back and say something like, “The market sorts everything out.” I say, “That’s fundamentally undemocratic.”
Only recently did I realize that I was channeling Naomi Klein. This may be the most important part of The Shock Doctrine: The Rise of Disaster Capitalism on p. 140:
“It was in 1982 that Milton Friedman wrote the highly influential passage that best summarizes the shock doctrine: “Only a crisis-actual or perceived-produces real change. When the crisis occurs, the actions that are taken depend upon the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.”…
The kind of crisis Friedman had in mind was not military but economic. What he understood was that in normal circumstances, economic decisions are made based on the push and pull of competing interests-workers want jobs and raises, owners want low taxes and relaxed regulation, and politicians have to strike a balance between these competing forces. However, if an economic crisis hits and is severe enough-a currency meltdown, a market crash, a major recession-it blows everything else out of the water, and leaders are liberated to do whatever is necessary (or said to be necessary) in the name of responding to a national emergency. Crises are, in a way, democracy-free zones-gaps in politics as usual when the need for consent and consensus do not seem to apply.”
Thank goodness the crisis hit before the last election and not after it. Since the Republican Party still needed votes, George W. Bush had to work to keep the system afloat otherwise the newly unemployed would have turned this country into a one-party political system. When Obama became President, he chose not to reach for Friedman’s failed ideas but for Roosevelt’s and for Keynes’ ideas – the ones that actually worked in the Thirties. These ideas not only had a better track record than market-oriented conservatism, they have offered the first opportunity in decades to prove that government can work as long as the people running it actually want it to be effective.
Perhaps this is why the people I find myself arguing with hate Obama so much. Here was a golden opportunity to privatize everything, and he decided to make government work again instead. While we can’t know what would have happened had John McCain and Sarah Palin been elected, imagine what would happen if the Republican Party then continues to rally against Obama’s policies even if they solve (or perhaps even just alleviate) this economic crisis. In that case, this country would have to be nuts to elect any Republican to any office ever again.