David Stockman and the GOP Welfare State
I’m a little late in taking notice of this hilarious and extraordinary piece of punditry, but it strikes me that not enough attention has been paid to the recent self-crucifying New York Times editorial written by Ronald Reagan’s former budget chief and economic Svengali, the notorious Richie Rich weasel David Stockman.
Stockman was once the arch-priest of supply-side economics, but he’s had a conversion over the years. In a piece blasting the legacy of Republican economic policy entitled “The Four Deformations of the Apocalypse” Stockman essentially argues that Reaganomics evolved into a policy that fused the worst aspects of the traditional economic strategies of both the right and the left:
Republicans used to believe that prosperity depended upon the regular balancing of accounts — in government, in international trade, on the ledgers of central banks and in the financial affairs of private households and businesses, too. But the new catechism, as practiced by Republican policymakers for decades now, has amounted to little more than money printing and deficit finance — vulgar Keynesianism robed in the ideological vestments of the prosperous classes… This approach has not simply made a mockery of traditional party ideals. It has also led to the serial financial bubbles and Wall Street depredations that have crippled our economy.
Here, Republicans have been oblivious to the grave danger of flooding financial markets with freely printed money and, at the same time, removing traditional restrictions on leverage and speculation. As a result, the combined assets of conventional banks and the so-called shadow banking system (including investment banks and finance companies) grew from a mere $500 billion in 1970 to $30 trillion by September 2008.But the trillion-dollar conglomerates that inhabit this new financial world are not free enterprises. They are rather wards of the state, extracting billions from the economy with a lot of pointless speculation in stocks, bonds, commodities and derivatives. They could never have survived, much less thrived, if their deposits had not been government-guaranteed and if they hadn’t been able to obtain virtually free money from the Fed’s discount window to cover their bad bets.
I was a little depressed upon reading this because it immediately struck me that Stockman had summed up in a few elegant paragraphs the main point of my upcoming book Griftopia (shameless plug alert) and that he had done so online, for free, while my version currently costs $17.16 on Amazon.com. The fact that it was David Stockman scooping me was sort of doubly hard to take. But it’s still interesting that this sort of talk is slowly gaining momentum in some Republican circles, where there’s increasing acceptance of the notion that a monstrous betrayal of so-called traditional conservative economic ideals began to take place in the Reagan years.