What form will the backlash against lightly regulated capitalism take in the US? I ponder the question is this piece for the FT's Analysis page:
Even before the worst financial crisis since the 1930s bore down on the US this summer, the country seemed poised for an ideological shift. The administration of President George W. Bush was immensely unpopular. Anti-trade and anti-business sentiment was on the rise and both main political parties, in different ways, were responding.
The technocratic market-friendly liberalism espoused by Bill Clinton and the New Democrats was already much less prominent in Barack Obama's presidential campaign. As the country's economic difficulties have worsened, the pro-market theme has not so much subsided as disappeared. Mr Obama now is far more likely to talk about the bankruptcy of "trickle-down economics" than the need for competition and incentives.
John McCain, the Republican candidate, has yielded nothing to his opponent in the stridency of his recent denunciations of "Wall Street greed". The administration, meanwhile, has been forced to swallow what remained of its rhetorical commitment to market forces and deregulation with a $250bn bank recapitalisation - a plan that Hank Paulson, Treasury secretary, described as "objectionable" but necessary.
Where might this lead? Does the present upheaval, as some have speculated, point to the end of a distinctively American capitalism? On the whole, this seems unlikely - though the pressures on "American exceptionalism" have rarely looked so strong.
Read on here.
There's an error in the full article. It says that some pollsters are talking about a possible "veto-proof" Democratic Senate majority (67 seats). What's actually being discussed is a possible FILIBUSTER-proof majority (60 seats).
It used to be that a corporation doing business in our nation had to serve the common good.
And that common good -- the sense of the ethics of business -- is missing from your discussion. While there may have been nothing illegal about mortgage-backed securities, were they ethical? While there's nothing illegal about shoes that fall apart after six wearings, is it ethical?
Given limited resources, a heating planet, and laws and regulations that change depending on where you are, it seems that free markets -- now more than ever -- require a keen sense of ethics. Trust will be crucial for capitalism to function.
Squandering good will for profit seems profligate.
Clive,
I read your article out of a copy of the FT that someone left at my favorite bar beside the business section of the NYT. It occurred to me that, having never seen the FT at this bar before, people only tend to pay attention to the minutia of Wall Street when business is bad. When times are good, they're watching the stock ticker on MSNBC - which is about as informative as playing with a magic 8-ball. So, perhaps an atmosphere of close examination of what these jackass CEO's are up to - how they're running their businesses, how much they're getting paid and whether or not they're earning it - perhaps that scrutiny is worth all the regulation the over-compensating nimrods in congress can pass and the marginally competent staff at the Treasury can enforce. For too long, the big shots on Wall Street have marched around like they were Greek Gods - impervious to failure and far too lofty to listen to their critics. A complete absence of humility is the surest sign you're heading towards the edge of a cliff.
This is all true, I think, but I wonder too about the effect of a deep recession in the US where income and wealth inequality are now so great.
It used to be that a corporation doing business in our nation had to serve the common good.
Really? What has there ever been, in any nation, that compelled anyone to serve the common good?
You have never been able to sell that which others do not wish to buy - but that is exactly as true now as it has ever been.
People may feel a greater need to proclaim their virtue at some times rather than at others - it does not follow that they are genuinely more virtuous at the times when they are making the most noise about it.
What scares me is that many people - Obama and congressional Dems included - see this as an appropriate time and place for the federal government to grab even more control over the economy in the name of economic progressiveness. The federal government is not particularly efficient, flexible, or blessed with foresight, and I think that a great many people who are currently looking forward to an Obama presidency and all the promises he offers will be very disappointed with the results.
Despite its imperfections, American capitalism has historically been very dynamic and an engine of growth and upward mobility - moving towards a more socialistic European model is not the answer and will mean less economic opportunity in the long run.
I find it ironic that at the time when capitalism suffers from its lowest popularity, it is also the best time to buy a home and US equities.
But yes the majority electorate seems to have taken in by a cool Santa Claus which has rhetorically convinced them the mathematical impossibility that lower taxes for some plus higher spending for that same group equals a balanced budget and economic prosperity for all.
My only hope, which has been partially confirmed with his partial flip-flop on trade, is that Obama is far too intelligent to enact what he has argued.