While the headlines of the day are filled with the story of Congress’ rescue of Fannie and Freddie (in a bill which seems to have been stuffed with more of what the Americans call "pork" than a sausage factory), for this observer the most exquisite testimony to the sorry depths to which the modern interventionist government has fallen came in an op-ed for the New York Times, penned by former Fed Vice-Chairman and all-round policy "wonk," Alan Blinder.
Entitled, "Cash for Clunkers" our learned friend there set out — with what, to this reader, seemed to contain not the slightest, mitigating trace of irony — a hare-brained scheme which promised to conflate the worst elements of corporate welfare, crassly redistributionist politics, and the promotion of one of those hot-button issues so beloved of our latter-day Guardians — so-called "global warming."
The gist of this truly Swiftian contrivance — for those not given a hint by familiarity with the American vernacular — is for the State to offer a premium to buy up the oldest, most clapped-out cars on the roads (the "clunkers"), subject to some upper income limit on those who own them (to ensure that only the deserving poor can benefit from this injection of Other People’s Money), and then to scrap every last rusting jalopy this largesse brings in.
According to Professor Blinder’s own breathless characterization, such a tawdry piece of populism would constitute “the best stimulus idea you’ve never heard of” (sic) because it would “address today’s concerns over stimulus, inequality, and greenhouse gases, as well as an ageing vehicle fleet.”
But why stop at cars?
Can "poor" people not be allowed to trade in their old sneakers, too, so they don’t embarrass themselves with their lack of fashionability the next time they take the bus down to the strangely deserted shopping mall?
Is it any more equitable that the man on less than the median income is expected to make do with only a 32-inch-screen TV in each of his six bedrooms while he waits for the foreclosure proceedings on his house to reach their tragic culmination?
Should the beneficent Shepherd of the State not also protect the lower orders from the social stigma and the crushing assault on self-esteem which arise from no longer being able to tap a line of credit in order to buy the latest iPhone?
What the good Professor Blinder is utterly able to recognize, of course, is that both Joe Six-Pack and his supposed elders and betters in the ivy-clad halls of Princeton have got themselves into their current parlous state by spending too much, not too little, in gratifying their momentary whims. Handing them cheques and exhorting them to spend again, is therefore not the remedy most likely to effect a lasting cure for their affliction, though it may, of course, buy a few more X’s for some wannabe-Il Duce in the next political beauty contest.
As one of the more vocal apologists for the Federal Reserve, Prof. Blinder is also precluded from the realization that this endemic imprudence has been encouraged to reach such an Olympian scale only because of the long years an interfering and intrusive political class has spent eroding individual thrift and personal responsibility. Nor is he exactly the bookie’s favourite to confess that this has been worsened by the burden of having to grapple with the false signals and perverse incentives given off by the inherently unstable monetary system of state-sanctioned, fractional reserve banking from which that same governing elite draws it sustenance.
As we have tried to point out, on any number of occasions over the course of the last year, none of what is taking place has to do with either a failure of (if you are currently exulting from the Red end of the political spectrum), or a betrayal of (if you are instead donning sackcloth and ashes from the Blue) anything which remotely resembles "free market capitalism."
Inflationary state corporatism is what has "failed" — or, rather, is what has reached yet another, all-too-frequent low point — and the legally-privileged nonsense of our monetary arrangements are what have, once again, swept us all up to have our wealth consumed in the maw of their own internal contradictions.
But, alas, such protestations are wholly futile, for the Orwellian programming to which we have long been subjected means that we no longer insist upon that proper definition and rigorous use of words which are indispensable to clear thinking.
Thus, we are taught that a quasi-private mongrel of a mortgage company, spawned (along with so much other persistent social evil) during the dark decade of the 1930s — an entity able to shower the riches of Croesus on members of an executive board often unable to produce a viable set of accounts — a set-up making its ostensible profits, not via a process of genuine entrepreneurialism, but through the cynical moral arbitrage of pretending to accomplish a warm-glow mission of "promoting the American Dream" at its sponsoring politicians’ vote-grubbing behest — this ill-bred chimera, we are told, somehow epitomizes the "unacceptable face of capitalism," red in tooth and claw!
As Gustav Stolper put it in his 1942 book, This Age of Fable:
“Hardly ever do the advocates of free capitalism realize how utterly their ideal was frustrated at the moment the state assumed control of the monetary system. A "free" capitalism with government responsibility for money and credit has lost its innocence. From that point on it is no longer a matter of principle but one of expediency how far one wishes or permits governmental interference to go. Money control is the supreme and most comprehensive of all government controls short of expropriation.”
We would all do well to remember that, the next time we start blaming "capitalism" for our woes.
Sean Corrigan [send him mail] writes from Switzerland.