Month: January 2012

by Smitty

From Has the conservative elite really failed?

Alan Greenspan, a free-market hero, blundered horribly in failing to regulate shadow banking, followed by another Republican appointee, Ben Bernanke. They forgot the old adage that the job of a central banker is to take away the punch-bowl just as the party is getting good. If they had acted to pop the housing price bubble earlier, they probably would have been lynched–it’s easy to beat them up with hindsight–but they still deserve a lot of blame.
These were mistakes, to be sure, but do they imply that America has suffered an “unprecedented failure” of its conservative elite? Just what sort of conservative elite did Ross Douthat have in mind? The victors of the Cold War and the authors of the Reagan economic boom set the tone for an enormous expansion of conservative intellectual life. How could we have done it better?
More disturbing, I think, is the extent to which America has suffered not a failure of the elites, but a failure of the people. Do we measure up to the founders of this country? The fact that Americans fought a revolution against Britain in the first place continues to astonish me. When in all of history have prosperous men with property–farms and businesses–risked their lives and fortunes to establish a better political order? Only a spiritual grandeur of a depth we barely can imagine today can explain it. When in all of history has a country gone to war and sacrificed a 5% of its total population to suppress slavery? The evangelical zeal that sent the North to war, singing of the grapes of wrath in the apocalyptic vision of Isaiah 63, surpasses our understanding today.
Some of that sense of American purpose awakened after 9/11, and the conservative elite misspent the spiritual energy of Americans in the Quixotic pursuit of nation-building in Iraq and Afghanistan. But Ron Paul is not the only candidate to state this plainly. Newt Gingrich has said the same thing.
What sets Mullah Ron Paul apart is something malicious, in my judgment: the assertion that a conspiracy of malefactors is responsible for the economic pain of the American people, and if these malefactors (for example the Federal Reserve) were to go away, the pain would disappear. That is demagoguery of the most insidious kind.
There is no truth-telling here: to absolve Americans of their greed, indolence, and cupidity in the great home price bubble of 2008-2006 is the biggest lie of all. Americans caught a ride on a $6 trillion wave of foreign capital inflows, and thought the free money would be there forever. The smartest kids got MBA’s and law degrees instead of learning engineering.

Why are we bashing Greenspan and Bernanke? The Federal Reserve is, to quote Thomas Sowell, “A cancer” The best those blokes can do is coax the tumor into growing more slowly. The unfortunate thing is that the ugliness of Ron Paul’s remarks is going to get blended with the idea of curbing the Federal Reserve, and thus it will be OK for our conservative elite to continue their failing ways, and protect the Fed.
The Federal Reserve is the crossroads of the Iron Law of Bureaucracy and moral hazard, he said, easing himself quantitatively. Ahhhh!

Do you have a reference for this claim? It would be very interesting to see where Ron Paul offered:

the assertion that a conspiracy of malefactors is responsible for the economic pain of the American people, and if these malefactors (for example the Federal Reserve) were to go away, the pain would disappear

Again, I’m no apologist for the fellow, but I don’t think he offered any magic wand in “End the Fed”. The conspiracy has been the tacit one of the Iron Law mentioned above. Significantly curbing the Federal Reserve isn’t going to reduce the net pain of fiscal policy, but, removing power from un-elected, opaque officials would at least be in keeping with the spirit of representative government for which we claim to clamor.

And what’s this noise?

There is no truth-telling here: to absolve Americans of their greed, indolence, and cupidity in the great home price bubble of 2008-2006 is the biggest lie of all.

Mister, I have not been late on my mortgage these 12.5 years. That a group of folks, along with Fannie/Freddie, Barney Frank, Chris Dodd, the Federal Reserve, and some bad banks, engineered a vast wealth transfer since the Community Reinvestment Act was signed is not an indictment of “Americans”. Conservatives who were in office and want to claim anything like the title “conservative” are not exactly at fault, either; but neither are they blameless, having been in office as the crime went down. The conservative elite is so afraid to scare the horses that you’re a kook if you talk about chopping a trillion out of the budget. Say Social Security is a Ponzi scheme? Yeah, you’re out of consideration.

Our conservative elite is so interested in playing ball-control offense that it is in jeopardy of repeating 2008.

via Instapundit