Tuesday, April 20, 2010

Yes, It's a Republican Plot

Most of the economists I have known have been associated loosely with the Republican Party or maybe the Libertarians. (Mark Thornton and John Sophocleus, two of my favorite economists and writers, both ran for statewide offices in Alabama as Libertarians, and both did better than most other Libertarian candidates have done. Neither are kind to the Republican Party.)

That being said, I never have dealt with any economists that were hyper-partisan Republicans, and at most economic events dominated by my friends, I heard more criticism of Republicans than I heard praise. Then there is Paul Krugman.

Even though the Republicans are nearly endangered species in this Congress, Krugman still insists that they are like Goldstein, falsely convincing us that we are at war with Eurasia when, in reality, we are at war with East Asia. For example, as I have pointed out many times before, he continues to claim that it was Reagan and the Republicans that gave us financial deregulation when the most important deregulation bill, DIDMCA, was passed in 1980 when Jimmy Carter was president and Democrats had the same majority in the Senate and an even bigger one in the House.

So, I hardly am surprised when Krugman insists that Goldstein, er, the Republicans, might kill the present "financial reform" bill. Now, if this is anything like the "reform" that gave us Sarbanes-Oxley or the Patriot Act that "reformed" how the government conspires against its citizens, then I am not sure I am in the market for such an act and would cheer on anyone willing to filibuster it.

Krugman writes:
I have a theory about the problem here. My understanding is that Obama officials have looked at the polls, which show that the public overwhelmingly favors cracking down on Wall Street; so they assumed that the GOP wouldn’t dare stand in the way. But they seem not to have learned, even now, that the right has an awesome ability to create its own reality: that Mitch McConnell et al would stand in the way of reform while claiming to be taking a stand against Wall Street.
that is a most interesting theory, actually. Now, what does he mean by "cracking down" on Wall Street? What he means is that Wall Street becomes the repository for buying government bonds (after the Chinese decide they don't want any more of that junk).

Furthermore, what he wants is to create what essentially would be a large financial cartel held together by the wise regulators from the SEC (who, on application, would have to pledge that they, like Krugman, "believe in government"). I doubt Krugman will use the "C"-word, but that is what he wants, and he forgets that the last SEC-run financial cartel fell apart about 1980, whether or not he wants to believe it. Furthermore, if he believes that giving the Federal Reserve System even more power than it has now is "reform," well, Lucy van Pelt has a football she wants you to kick.

Of course, he could not resist hinting that not falling into line with his view of "reform" is racist. In his own words:
And let’s be clear: there’s a sort of tribal thing going on (and I don’t necessarily mean race, although that’s part of it). The hard right has managed to convince a large number of Americans that it consists of people like them, whereas progressives are alien and untrustworthy; in the face of that, rational arguments don’t make much of a dent.
That the "Progressives" are our friends reminds me of the scene in "The Unbearable Lightness of Being" in which dissidents are being interrogated after the Soviet crushing of the Prague Spring, with the interrogator shouting, "Don't you know that we love you?!?

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