Friday, November 21, 2008

The Reagan Paradigm Shattered to Pieces

"Government isn't the solution, government is the problem." That was the message Ronald Reaqan gave us, and his followers for three decades have pushed de-regulation and allowing as much freedom as possible in the private sector. And the results? Like an intersection without stop signs or stop lights, we've found ourselves with our critical intersections full of crushed cars, frantic paramedics and economic gridlock resulting from this series of disasters.

And where do the incompetent business people, who for years have decried government intervention into their realm, look for help? The government! OUR GOVERNMENT! Financial institutions make decisions that assume one possible scenario where they can be profitable. When that scenario doesn't pan out, is it the government's responsibility to bail them out? I am on the record as saying no. The candidate I supported, along with his opponent acquiesced and said it was ok to bail them out because the scope of the influence of these incompetents was too sevier to let them go down in flames. I'm swallowing my basic instincts and saying ok, I don't want my opposition to be responsible for our economy go from severely bad, to catastrophic.

Now, enter the people whose incompetence makes AIG executives look like Nobel Laureates. AUTO INDUSTRY EXECS. These first class, high paid, corrupt, incomparably incompetent dufuses now want the government to bail them out because they were dumber than a screen door in a submarine. That evil government, that has prodded the unwilling to save lives with seatbelts, airbags and some basic concerns for fuel efficiency, are now going to be asked to bail them out because government was right about what they should have provided, and because they didn't provide it, they are now bordering and chapter 11 bankruptcy.

Reagan where is thy wisdom, when government is more inspired than the private sector? Why is it that your favored class now comes to those evil bureaucrats seeking favors without condition? Should we impose true market conditions upon you? Or will you just blame the UAW for your faults? Oh yeah, their the guys. For the record, let's compare your salaries/benefits/stock options to those execs who work for Toyota, Nissan, Hyundai, etc. Let's truly examine where the disparity exists.

My father, as a patriotic American made a good faith effort through the eighties and nineties to buy American. However, he got really tired of having to buy new transmissions every other year, or have to have fuel pumps fail every 18 months. Getting stranded in Montana in January finally sealed the deal. He's been driving Toyotas ever since.

What sealed the deal for me was when my mother called me at her work because she couldn't figure out how to change a flat tire on her Chevy Suburban. The jack they had assigned to her vehicle would only fit under her vehicle when the tires where inflated. So I took my Toyota Celica jack and raised the suburban high enough to get the suburban jack underneath the vehicle enough so I could change her tire. The carelessness and incompetence of GM made an unmistakable impact upon me regarding the thinking of those who worked in Detroit. Do I want to bail out these idiots? Not until they can demonstrate to me that they deserve to be bailed out. Nothing I have read from Consumer Reports has indicated that they deserve our consideration.

The failures of the auto industry and the financial industry are complex with multiple variables. But government was not the major factor in their failures. Unmitigated capitalism was the failure. This isn't about ideology, but a manifesto for economic realism. The failures of corporate governance as well as government oversight are well documented. But the answer is not to further remove governmental controls, but to make them more rational and meaningful.

The paradigm that set my generation upon a negative view of government accentuated by Reagan, was fatally flawed. Reagan was no prophet in fact he was a false prophet. He was a radical ideologue who had no real understanding of economics. Where we are now, is a repudiation of his shattered legacy. When a liberal like me is a lone individual concerned about government taking equity interests in financial institutions, I can only conclude that conservatism is philosophically incoherent, inconsistent, and ultimately irrelevant.


Jeremy said...

Obi Wan,

On what experience or data do you base your faith in governments ability to solve these problems? Government has tried its hand before at a managed economy in our country. Remember Nixon? Remember price and wage controls? Remember stagflation?

Reagan's economic policies are responsible for two decades of the most dynamic growth and change our economy has ever seen. There are some failings but overall we are a more prosperous people because of those policies. I'm skeptical of your desires to return to Nixonian economics.

Bitch and moan about the auto industry all you want. Our politicians have given us absolutely no reason to trust them in their efforts to take the helm of our economy.

By the way...the free market worked. I love my Honda Accord. Let the American automakers go down in flames. They failed for various reasons. Our nation will be flush with the unemployed and they will need to be assimilated. Better this happen now than after another 20 years of government mismanagement.

Jeremy said...

I forgot to sign up for email follow-up comments. Sorry for this extra pointless note!

Anonymous said...

Obi wan,

You know very well that you are not alone. There are conservatives like me who are raising our voices in the wilderness with you decrying the foolish practices in business that you mention here.

Unfortunately you have given no argument here that the government would do better. They may have mandated seatbelts and some fuel efficiency standards, but the fact that foreign automakers are thriving in the United States while our big 3 are failing miserably is proof that they are not capable of surviving in a free market any longer.

That is not a repudiation of the free market system, it is a repudiation of the current corporate culture and their entitlement complex. It is further proof that the government should not be stepping in to save them from themselves. They need to feel the consequences of their short-sighted stupidity. In fact, we need to feel the consequences of our blind optimism so that we can correct the defects that are becoming ever more pervasive in our society (like taking American dominance for granted).

derekstaff said...

Yes, Reaganomics are responsible for dynamic growth and change: change to a food system in which our society is overfed and malnourished; change to hypermaterialism and ever accelerating conspicuous consumption; change to where only the wealthiest individuals can afford catastrophic health care; change to a financial system in which service providers are allowed to bamboozle the public in playing “gotcha” capitalism; change to a society which is financially overextended and in record debt; change to an economy which has become over-corporatized and in which the economy is increasingly dominated by an ever shrinking oligopoly. Great change.

We need to get over the free market idolatry and corporatism of the Chicago school and recognize the need for an effectively balance mixed economy.

bekkieann said...

Well said, Derek!

Jeremy said...

Yes Derek...well said. Your faith in government to solve all these problems is inspiring. Maybe you're right...people are just too dumb to feed themselves, pick out what they should be buying, and bank correctly. A bigger government to act as our nanny is the perfect solution to all of those problems.

Or maybe we'll be just fine with a basic welfare system as a safety net and a government that gets out of the way and doesn't try to nanny us so much. Not too likely under our upcoming administration but it sure would be nice.

Anonymous said...

A couple of notes:

Don't confuse naked self interest for thoughtful principle. Just because the Big 3 auto makers have mismanaged their businesses for the past 30 years and have come cup in hand to the government, don't think that anyone other than themselves agrees with them. You are putting market economics and the asked for and not yet received bailout in the same group, where they do not belong.

The underlying causes, not the symptons of the banking crises were goverment intervention and not the lack of it. The goverment has been juicing the housing market for 40 years with agressive Fed intervention, the creation and mismanagement of Fannie and Freddie, and a host of laws and regulations pushing and encouraging risky behavior. All the while politicians in both parties were more tha happy to take the housing and banking lobbyists' donations. So don't even begin to claim that this is a private market problem the goverment needs to save us from.

So yes, it is amazing that in fact some people act in a selfish way and run to the goverment for money. But don't call these people market conservates. And don't pretend the goverment didn't have a huge hand in causing the financial crisis in the first place.

Obi wan liberali said...

For the record, I think government has been more effective than many people give it credit for. An interstate highway system, deposit insurance (think how many runs on banks we would have had without it), National Parks, programs regulating our water and air (remember where we were prior), etc., I think government as a set of institutions, both federally and locally rarely get the credit they deserve.

The current crisis is not the result of too much government interference, but in lax enforcement of existing regulations and a move by government under the spell of conservative lawmakers to push for de-regulation.

Free markets still need rules and regulations. Like a road system without speed limits, stop signs, and enforcement of those laws, society quickly becomes immobilized by one accident after another.

Government isn't always the solution. But it often isn't the problem that proponents of free markets usually make it out to be.

Carefully crafted laws, rules and regulations make a difference. The question is, how can we make the process in designing those laws and regs transparent and rational. Lobbyists for the interests being regulated have had far too much influence in the process at the expense of the general public.

I'm willing to entertain options for how we can make our government work better. But I'm not willing to go with the blanket ideological scapegoating of government as the scapegoat for all our problems.

But I do find it interesting that politicians who claim government is the problem, don't seem to have a problem with justifying that assertion through their own incompetent administration of government.

Anonymous said...

Obi, I am posting a link that you may find interesting. Recently, UCLA (no bastion of conservatism)found that government intervention prolonged the Depression by at least 7 years.

Now, if you are simply going to blame this entire mess on deregulation than you must be referring to Democrat Presidents. Jimmy Carter signed the CRA and Clinton signed the two enormous deregulation bills, the last one in 2000 that included the "Enron loophole", the other in 1999 opened up Fannie Mae.

Bush did his part by closing his eyes of course but blaming this solely on deregulation and lack of gov't is a little like blaming guns for crime.