Home > General Comment, Off Blog, political-economy > The impending death of Conservative Socialism

The impending death of Conservative Socialism

Brad DeLong wrote a piece that just begs to be read. In it, he examines the reason why, as he so elegantly states:

The Bush administration, having entered office as social conservatives, leaves office as conservative socialists, proprietors of the most sudden large expansion of the state’s role in the US economy since mobilisation for the second world war.

For Brad, the question is why this happened:

Why did they decide to partially and quasi-nationalise America’s banks – to invest $250bn in preferred stock plus warrants and tell the banks that it wanted them to use the capital to expand their loan base rather than contract it via deleveraging? It is certainly not what Henry Paulson signed up as Treasury secretary to do.

The question for us, however, as election day approaches and the Party of Wall Street plummets to earth, like John McCain’s fighter jet over the rice paddies of Vietnam, Moron in the cockpit (Mission Accomplished!) for an extended stay at the Obama Hilton, we wonder of the fate of his successor.

That tortured metaphor in place, we can proceed.

The rush of the Party of Wall Street into the safe embrace of its chief rival, the Party of Washington – so completely and handsomely expressed in the endorsement of Barack Obama by that lapdog of the House of Bush, Colin Powell, this past Sunday – the conversion of social conservatives to the conservative socialism of the Democratic Party, no doubt, causes you to consider the possibility that this event heralds not simply the collapse of the former, but also the timely demise of the latter.

In this, you are indeed one step ahead of us, knowing, full well, that without Wall Street, Washington can not function in the old way.

Conservative or not, the faint socialism of Washington’s variety – itself the faintest reflection of the no less faint European reflection of 19th Century Socialism – rests on the most vibrant practice of full blooded Wall Street ponzi schemes erected from a stable base of dollar reserves, easy credit, and an ever lengthening social work day.

Until now, the Party of Washington‘s most convincing argument on behalf of its conservative socialism – read: Social-Fascism (Yes, we did use the “F” word, now clap your hands over your eyes!) – consisted almost entirely of its alleged role in protecting the rest of us from the predatory practices of Wall Street.

One of the intellectual apologists for this “function” of Washington is the economist Jared Bernstein, who wrote some time ago:

… we live in a complex world, where markets can provide only partial solutions to the challenges we face. Market failures abound, and government will unquestionably be called upon to repair these failures. For years, we’ve elected politicians who’ve railed against this reality, pretending that they can refund that fifth of the economy that we spend on government –”it’s your money!”– and still provide the services we want and need. To put it mildly, it hasn’t worked. We’re spending the same share as ever, yet we’ve squandered years when we could have been making progress against the challenges of globalization, of environmental degradation, of deteriorating infrastructure, of economic inequality, of costly inefficiencies in health care.

The only problem with this delusion of Mr. Bernstein: precisely at the time the Party of Wall Street has finally and completely conceded its bankruptcy – both ideological and actual – and turned to the Party of Washington for Bolsheviki Salvation, Washington is itself insolvent, and, under the grinding crush of an unprecedented post-War economic downturn.

Washington may not only be unable to help its retainers on Wall Street, but itself as well.

It is clear industry is faltering, state and local government are facing defaults, unemployment is rising, housing mortgage, and consumer debt defaults continue to increase, pension and retirement funds teeter ominously.

In January, the victorious Party of Washington will face this daunting environment, armed only with the treasury’s printing press, a somewhat fearful community of central banks seeking the safest possible investment instruments in a rapidly deflating economic bubble, and an extremely attenuated ideology to repair what are now being called the “excesses of Wall Street,” but really is a watershed moment for humanity.

Good luck, guys!

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