“Drop Dead.” That’s the best answer that some conservatives have been able to offer to a country in teeth of the worst financial crisis we’ve faced in a generation. When the Wall Street crisis loomed and the bailout was being debated: let the market fail, and risk another Great Depression, “for the sake of the altar of the free market.” Now, the economic downturn having worsened – and in ways that are more deeply felt in parts of the country far from centers of financial or political power – their response to rescuing the largest remnant of our manufacturing sector? “Drop Dead,” and devil take the hindmost.
It’s not that there’s not a political angle to the GOP refusal to bail out Detroit the same way Wall Street – where executives’ financial dealings were at least as irresponsible and disastrous as any made in Detroit – was bailed out. The political motivation is clear: if the “Big Three” fail, foreign automakers are likely to serve as a back-up, and they will likely build their factories in southern states where conservatives might finally offer their base something besides the “red meat” of culture war rhetoric and anti-gay marriage initiatives. Like jobs to finally replace the textile jobs that long ago departed for other shores on the wings of trade agreements that were supposed to be a boon to our economy; a drop in that rising tide alleged to lift all boats.
That they will be non-union, lower-paying jobs than those that will disappear further north, with fewer benefits may not matter to a population so ravaged by conservative economics that they are willing to complete the final loop of globalization, and become the low-wage labor employed by multi-national corporations. They are jobs after all, though not enough to replace the jobs that will be lost in the process of a collapse.
It’s not the political angle but the callous, cavalier attitude towards the consequences of collapse in those corner of “real America” that conservatives just spent an entire campaign extolling, that typifies something I’ve started calling “Drop Dead” conservatism, showing its true face as its many masks – of compassion, values, etc. – slip.
It’s a different face of conservatism than we’ve seen as the dual dramas of the election and the financial crisis have played out. It’s not the sad, befuddled conservatism of Alan Greenspan, reputation in tatters as he surveys the wreckage of self-interest run amok, admits that he “made a mistake” in one breath, and announces in the next that he has “found a flaw.”
“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told the House Committee on Oversight and Government Reform.
Now 82, Mr. Greenspan came in for one of the harshest grillings of his life, as Democratic lawmakers asked him time and again whether he had been wrong, why he had been wrong and whether he was sorry.
Critics, including many economists, now blame the former Fed chairman for the financial crisis that is tipping the economy into a potentially deep recession. Mr. Greenspan’s critics say that he encouraged the bubble in housing prices by keeping interest rates too low for too long and that he failed to rein in the explosive growth of risky and often fraudulent mortgage lending.
“You had the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis. You were advised to do so by many others,” said Representative Henry A. Waxman of California, chairman of the committee. “Do you feel that your ideology pushed you to make decisions that you wish you had not made?”
Mr. Greenspan conceded: “Yes, I’ve found a flaw. I don’t know how significant or permanent it is. But I’ve been very distressed by that fact.”
The oracle is among the last to discover what the rest of us have long since experienced in more tangible ways: Unbridled self-interest, it turns out, isn’t rational at all, and simply consumes until it destroys even its own environment and needs saving from itself.
What else could have been expected in a market designed by Greenspan and others to operate a kind of derivative-driven Hobbsian “state of nature” where there is “no justice and no injustice because there are no laws”?
And how could he not have known? How, when he was warned again and again, and either ignored his critics or silenced them, and scorned calls to regulate the financial instruments that played a huge role in bringing about this crisis? Why did he do nothing at all to stop it or reduce the harm that would inevitably be done? Why did he choose instead to let the bubble burst and pick up the pieces later?
He did nothing for the same reason that “Drop Dead” conservatives say “Drop dead” or “Let the markets crash.” Knowing the kind of disaster that lies ahead and the very real suffering that most Americans will face, they don’t believe that anything should be done. Their political philosophy doesn’t allow for it.
Greenspan only admitted to being “partially,” and then not necessarily wrong in his assumptions about markets and deregulation. The flaw he “discovered” was one that the other fundamentalists in the now fractured conservative coalition could have pointed out to him: people, in this case people on Wall Street, sometimes fail to behave honorably.
As long as people are compensated hugely for taking risks with other people’s money, and do not suffer equally on the downside, then those risks will inevitably become outrageous. Whether markets are efficient or not I don’t know for sure, but I do know that if there’s a way for someone to make money at another’s expense, he will. In spades. I want out.
…I believe that to get to the root of the matter, we have to address the bad side of greed. We know from Ivan Boesky and Gordon Gecko that greed can be good. Greed makes the world go around; it makes people take risks that ultimately lead to economic or scientific advances. But the greedy must also face the consequences of taking those risks.
Again, he was wrong. The risks taken were being monitored by private parties whose prevailing interest was in the short term returns on investments. Not the integrity of the process. Greenspan must have imagined a Wall Street populated by pure-hearted, suit-clad gentlemen who would rather make less money honorably than make a bodacious pile dishonorably.
But if you get to keep the pile, and get bailed out by taxpayers, what profit is there in honor?
And that’s why, as tempting as it may be to view Greenspan as a sad old man who has seen “the whole intellectual edifice” of his world – and worldview – collapse, it is also dangerous.
The face of “Drop Dead” conservatism isn’t quite the face of desperation that we didn’t see from John McCain – desperation that Hillary Clinton only heard, in a phone call that might not have come at 3:00 a.m., but was at once a revelation and a concession.
It could hardly be anything else when the Republican presidential candidate – between debates, and trying to find a way to speak to a country in the teeth of a crisis that has his party’s fingerprints (and, regrettably, those of too many Democrats) all over it – calls a former Democratic candidate for advice.
On Sept. 24, Hillary Rodham Clinton received a surprise phone call from the man she’s often denounced as an economic know-nothing: John McCain.
This was no social call, even though Clinton likes McCain enough to keep his photo on the wall of her Senate office. The GOP nominee had already chatted with Bill Clinton about the mortgage crisis and wanted to pick the senator’s brain about her new proposal to have the federal government buy up bad mortgages and renegotiate terms more favorable to homeowners on verge of default.
“McCain said he had been motivated by it, he was very complimentary about what she had proposed and wanted to know more,” said a person with knowledge of the call.
Clinton responded coolly. “She didn’t engage him, she just said, ‘Thank you’ and heard him out.”
Three weeks later, at the town hall debate in Nashville, Tenn., McCain rolled out a $300 billion anti-foreclosure plan that’s similar, if not identical, to Clinton’s – and subsequently credited the concept “to a suggestion that Sen. Hillary Clinton made not that long ago.”
Much as Greenspan would do in his congressional testimony, in that moment, McCain conceded. Not the election — not yet, anyway — but that it hadn’t worked. The whole conservative experiment just hadn’t worked, at least not for a great many Americans, many of whom would be casting ballots in November.
Think about that for a minute. The Republican presidential candidate – in the midst of an ever-expanding economic crisis, and with an election just over a month away – picks up the phone and who does he call for advice? He does not call his economic advisor, Phil Gramm. He didn’t call Don Luskin, his other economic advisor whose advice he (thankfully) has never followed. He didn’t call any of his other economic advisors or his friends from the corporate world. He didn’t call his running mate, whose advice he’s sought out many times, on other issues.
If fact, he didn’t call anyone in his party, as far as we know. Not even his running mate, whose advice he’d sought many times before. No. He called a former Democratic presidential candidate. (And shortly after calling a Democratic former president for similar advice.)
What kind of a Republican – never mind a Republican candidate for the White House, running behind in the middle of an economic crisis – seek economic advice from a Democrat? One who knows what McCain knows, if he knows as much as his own campaign aide who said, “If we keep talking about the economic crisis, we’re going to lose.”
And of course McCain knew as much. His phone call to Sen. Clinton came just a couple of weeks before the campaign aide’s remark, and the weeks prior to that call were packed with events like the biggest bailout proposal in U.S. history, even further deregulation by the Fed, the demise of Wall Street’s last investment banks, the $85 billion bailout of AIG, and his own abrupt economic about face. And the most offered by the best minds and most belligerent members of his own party were calls for more deregulation and a willingness to let the economy crash “for the sake of the altar of the free market.”
The face of “Drop Dead” conservatism, betrays neither the recognition of error or the desperation of having no answers. It wears the trademark smirk of an un-chastened, outgoing president selling the snake oil of an unrestrained “free market” to leaders whose nations are reeling from the global crisis that has rippled outward from out economy. It wears the snarl of a chief architect of the current crisis defending both subprime mortgages and deregulation at this late date, when the consequences of his policy victories suggest his was a recipe for a poisoned economy.
High on delusion, denial, and derision, it’s the face of a conservatism unequipped to recognize – let alone meet – the challenges America and the world now face, and blind to the possibility drowning itself in irrelevance. It’s the face of a conservatism that, facing the failure of its ideology, has more anger than answers.