Conservative Self-Delusion On Liberal Economic Policy

The Anonymous Liberal has reviewed a number of conservative blogs and finds the same signs of self-delusion among many of them which I have pointed out in numerous posts (including here, here and here along with the previous post).

Most of the posts I read were filled with complete nonsense about the dangers of government interference with private industry (as if that’s not what always happens when companies go bankrupt). Many indulged in the paranoid fantasy that the Obama administration wants to take over and run GM, that administration officials would soon be sitting in the board room telling GM what cars to make, who to hire, where to build factories, etc. Others warned that this was a dangerous power grab by the Obama administration, that it was the first major step toward turning the country into a socialist state.

I’m always amazed by how willing conservatives are to believe their own lazy caricatures and, as a result, how completely and utterly they fail to understand the actual motivations and beliefs of their political opponents. The reality is that liberals in this country — including Obama — have absolutely no desire whatsoever to nationalize private enterprise. They’re not going around looking for excuses to take over corporations. Quite the opposite, actually…

The notion that there is anyone of significance on the American left who still believes in anything approaching genuine socialism is pure fantasy. That debate, to the extent it ever really happened in this country, was settled a long time ago. What we’re dealing with right now are differences of opinion regarding how best to manage the failure of a number of major companies. It’s not a debate about socialism vs. capitalism; it’s a debate about methods of damage control. But many conservatives have so deluded themselves with their own propaganda that they’re not even capable of following the conversation any more. So instead they spend all day indulging in paranoid delusions and debates that have no relevance to current events. It’s a sad spectacle.

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65 Comments

  1. 1
    Ron Chusid says:

    Fritz,

    You are either paranoid or have a very low opinion of American business.

    The goal is to have government involved for as short a term as possible to get these failed businesses back on their feet (which is hardly socialism). The length of time that we have this degree of government involvement depends upon how long it takes for these businesses to be able to succeed without government help.

  2. 2
    Fritz says:

    Eclectic, you have it exactly backwards.  Common stock votes.  Preferred stock has no vote, but is “preferred” because the owners get paid off before the common stock owners get anything.

    http://en.wikipedia.org/wiki/Common_stock

    Ron — definitely holder of a very low opinion on American business.  The jury is still out on paranoia.  How can I tell?

    You keep talking about goals.  I keep talking about actions.  I suggested the next election cycle as a good time to take stock (as it were) of whether the government controls a bunch of investment banks and a large auto company.  Do you think that timeline is too short?

  3. 3
    Fritz says:

    b-psycho, Obama’s actions are being portrayed by the opposition in rather apocalyptic terms partly because his actions and pronouncements have been portrayed by his supporters in wildly messianic terms for a few years now.  From where I’m sitting, much more of the drama has come from his supporters than his detractors.  Although that might be changing — I think his supporters are starting to look around and take deep breaths.

  4. 4
    Ron Chusid says:

    Fritz,

    It was primarily Obama’s opponents who used messianic terms for Obama as they  mischaracterized his supporters. For most Obama was simply a charismatic politician who offered the best shot of upsetting Clinton (and with preferable views to Clinton’s) not a messiah.

  5. 5
    Fritz says:

    Ron, I live near Seattle.  Perhaps I ran into more of the, er, livelier and perhaps less well-balanced Obama supporters than you did.  Of course, as a Ron Paul supporter, I certainly ran into my share of lively and not-fully-balanced people at our rallies as well.  In contrast, the McCain supporters were quiet, well-balanced, and went to bed early.  🙂

  6. 6
    Ron Chusid says:

    I do believe that the McCain supporters were the most quiet and went to bed the earliest.

  7. 7
    b-psycho says:

    Fritz: yeah, the whole “CHANGE!!” thing was overblown by some of Obama’s supporters.  I’ve been criticizing the portrayal of Obama representing a humongous political shift since even primary season, it annoys me so much.

  8. 8
    Christopher Skyi says:

    “The notion that there is anyone of significance on the American left who still believes in anything approaching genuine socialism is pure fantasy. That debate, to the extent it ever really happened in this country, was settled a long time ago. What we’re dealing with right now are differences of opinion regarding how best to manage the failure of a number of major companies. It’s not a debate about socialism vs. capitalism; it’s a debate about methods of damage control.”

    OK — this is a good point: “socialism” isn’t the best terms to use.

    However, what I think we can all agree on is that, starting with Team Bush, the government has really stepped their intervention into the economy.  

    So it’s really a debate between “interventionism” and “capitalism.” True enough, nobody decided to step up intervention because it just suddenly seemed like a great idea. The “crisis” mandated because the government had to “do something,” and doing nothing (and I agree with this), was not a realistic or sound option.

    But there’s a LOT of ground between doing nothing and “doing something.” 

    Then there’s the goal: is it intervention with the goal of “improving” the world by some standard?  If so, then that’s a goal of socialists and we can call that intervention ‘socialism.’ If it’s like today, a response to a crisis, an attempt to “fix” something that’s broken, then that’s . . . what?  Fixism?

    So Team Obama is implementing ‘fixism’ rather than ‘socialism.’

    Then it get’s practical: what CAN the government reasonably/rationally do? It’s power, knowledge and control.

  9. 9
    Ron Chusid says:

    Christopher,

    During the campaign when I had some posts on the Chicago School influences on Obama, along with links to articles calling him a left-libertarian, I did point out (which I’m sure you would agree with) that Obama is neither a libertarian or a supporter of laissez-faire capitalism. I’ve also often pointed out, which you probably would also agree with, that the Republicans are hardly true supporters of laissez-faire capitalism.

  10. 10
    Eclectic Radical says:

    Fritz, thank you for correcting my error.

  11. 11
    Fritz says:

    No problem, Eclectic.  It is sort of surprising when “common” has rights that “preferred” does not.  Counter-intuitive.

  12. 12
    Christopher Skyi says:

    “The bottom line remains that the goal is to bail out businesses which failed and hopefully get them back up and running. This is quite different from nationalizing businesses out of an ideological desire to do so.”

    Exactly right on both counts — but (you knew the “but” was coming, right?) the practical end results come down to a unique American style of socialism:

    Recall the mantra rolling around the MSNBC when TARP was being passed was “the taxpayers will get their money back”? This was the sell. (Note: this was team Bush, not team Obama).

    Fast forward a few months to this past March (2009) when the  Ethisphere TARP index recorded a $21 billion drop in value.

    What in the hell is the “TARP index” you’re asking?  Is that like an ETF?  That’s exactly what is, and you should know about it, but YOU OWN SHARES of the Ethisphere TARP index.

    The TARP Index, created by the Ethisphere Institute, tracks the U.S. Federal Government’s return under its TARP investments. Out of the $306.1 billion so far handed out under TARP since its inception, there has been an unrealized loss of $123 billion, compliments mostly of the big 4: C, BAC, WFC and JPM. In other words, the U.S. Government (and its taxpaying funders) has lost over 40% of their investment. This translates into a loss of $1,082 per every US household, roughly double the proposed stimulus tax credit.

    But, come on, don’t cry. Why should this investment be any different from your other investments lately?

    Well, I guess there is one crucial difference: the TARP investments were destined to go down in value, because it was buying distressed assets (or shares of stock for distressed companies) that no one in the world was willing to buy, probably at any price. What’s the value of something nobody is willing or able to buy? Zero.

    Now that we (via brokers team Bush) own them  – all of a sudden they’re worth something?

    TARP was based on the fiction that anything in finance or real estate last year was really worth anything near their going market prices.

    Yet even if we give the devil (team Bush) its due, the performance of the Democratic leadership was pathetic. The most heinous aspect of the bill, putting the Treasury secretary outside the reach of law, was never cut back. The first draft, a doodle on a napkin, was offensive to democratic processes, the second draft added a lot more words but was still way too thin on basics, like objectives, criteria, procedures, and the final draft loaded tons of pork in to assure passage. And the ironies kept multiplying. The bill was wildly unpopular even with the media falling into line (and in the later stages, a clearly orchestrated campaign to have financial services industry employees contact legislators to counter the groundswell of opposition).

    And, as much we’re all disgusted with the GOP on this blog,  it WAS Senate Republicans who were the last holdouts.  At least there was that.

    Let’s be clear about the democrats in congress: Basically, Bush f***ked Obama by nullify the upcoming election by getting far reaching legislation in place that should have been left to the next Administration.  He created a crises atmosphere and then calls for comprehensive and badly drafted legislation under panic conditions, and the Democrats in Congress (Pelosi in particular) gave the President what he wanted.

    Thanks everyone. Great job!

    And team Obama continues to ride this train wreak to it’s inevitable conclusion. Remember the lost in value of the TARP investiment in March?

    Today, in what should likely be a much more publicized piece of information, the Congressional Budget Office doubled the projected cost of the TARP bailout plan to $356 billion, versus an earlier estimate of $189 billion: an increase of $167 billion on the taxpayer’s dime. According to the March CBO report, the total revised deficit under the Obama budget will hit $1.8 trillion in 2009 (and then never go negative pretty much in perpetuity, in other words deficit forever).

    On page 8 of the CBO report, the reason for the astounding increase in TARP costs is given:

    Troubled Asset Relief Program.

    Since January, CBO has raised its estimate of the net cost (on a present-value basis) of the transactions covered by the TARP by $152 billion for 2009 and by $15 billion for 2010. Those revisions stem from three factors—changes in financial market conditions, new transactions, and a small shift in the anticipated timing of disbursements. Since CBO’s previous estimate was completed, market yields on securities issued by the firms that have received TARP funds have increased, thereby boosting the estimated subsidy cost of the Treasury’s purchases of preferred stock, asset guarantees, and loans to automakers. Also, the Treasury announced additional deals with Bank of America and American International Group (AIG) as well as participation of up to $50 billion in the Administration’s foreclosure mitigation plan, all of which involve subsidy rates that are higher than the averages in the previous baseline.

    If it took a mere couple of months for projected TARP costs to double for taxpayers, ZH can’t wait to see what the final cost will be as calculated by the CBO will be in another 9-12 months.

    I recommend readers flip through the entire CBO report not only for the pretty charts, but to see the slow motion trainwreck our economy is becoming, based on current insane spending projections, which dig the economy into a hole so deep that there is nothing in conventional finance that could possibly pull it out absent eventual hyperinflation or sovereign default.

    OK — it may not get that bad. But abandon all hope: it’s going to be BAD for a long LONG time.  The federal government is now completely emeshed in the financial markets, for the benefit of those “markets” (though there now is no market — it’s gone) at the expense of us, the taxpayer.

    It’s a massive transfer of wealth, current and future. Sounds like Socialism to me.

  13. 13
    Christopher Skyi says:

    Opps — should have hat tipped Zero Hedge for the last part of the above post:

    Congressional Budget Office doubled the projected cost of the TARP bailout plan to $356 billion

  14. 14
    Christopher Skyi says:

    Sliding down the slippery slope:

    GM said that it will ask the government to take more than 50 percent of its common stock in exchange for canceling half the government loans to the company as of June 1. The swap would cancel about $10 billion in government debt.

    In other words, the taxpayers never get their money back, and we end up with a state-owned car company.

    It’s starting to look less and less “self-delusional” to be worried about socialism and liberal economic policy.

    On the other hand, in a related story, GM announced that the first new model will be … the Obamobile. It’ll still make the Oldsmobile, but it just won’t be as cool.

  15. 15
    Christopher Skyi says:

    ” I’ve also often pointed out, which you probably would also agree with, that the Republicans are hardly true supporters of laissez-faire capitalism.”

    Yes, I would certainty, 100%,  agree with that.

    It came to me as rather a shock many years ago when I really “got” what it meant when people said the GOP was the party of big business.

    At first, I thought, ‘well, that’s good — what’s wrong with that?’ and then I realized the GOP exists to protect big business from laissez-faire capitalism.  After that, it all (i.e., politics) started making much more sense.

    But thank goodness laissez-faire capitalism still exists to the great extent it does, esp. in the U.S.

    Case in point: laissez-faire capitalism verses BBG (Big Benevolent Government)t:
    Remember the day when President Barack Obama promised that concerned citizens would be able to track “every dime” of stimulus money online? He was talking about the official government website, Recovery.gov.
    Which doesn’t have any details about contracts or grants yet—and won’t until October 2009 or, more likely, sometime next year, long after the thrill of living is gone and a huge chunk of the $787 billion stimulus package has already been frittered away on “shovel-ready” projects such as the John Murtha-Johnstown Cambria County Airport (pop. 20 passengers a day).
    Thankfully, the folks at the information-services firm Onvia stepped in and created the site Recovery.org, which is already on the case and showing, as much as is possible, who is getting what.
    Like Adam Smith’s butchers, bakers, and brewers, it’s not from Onvia’s benevolence that the company is doing this, but from its self-interest: The company puts mostly small and mid-sized firms in touch with local, state, and federal agencies that need some sort of contract work done.
    Which might well be the point: The private sector has eaten the feds’ lunch on this precisely because they have to hustle in order to keep the wolf from the door.

    You can see an interview with CEO Mike Pickett here:

    http://reason.tv/video/show/780.html

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