McCain's laissez-faire attitude toward the economy may hurt him in November

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By FRED JORDAN • August 23, 2008

Most voters now find rather stale the "government stay out of business," laissez-faire economic credo of market fundamentalism. And, to put it frankly, even in the Republican Party there are doubts about market fundamentalism's capacity to meet boldly the challenges facing our 21st century economy. Although the party continues to pledge its loyalty to its long-time laissez-faire economic dogma, these professions of faith seem increasingly forced and lacking in conviction.

The certainty so evident at the dawn of the Reagan Revolution is gone. Standing at the inauguration podium in January 1981, Ronald Reagan proclaimed "government is not the solution; it's the problem." But the George W. Bush administration, in acting to salvage Bear Stearns in March, and now having fast tracked through Congress its plan to back stop the trillions in mortgages which Freddie Mac and Fannie Mae either own or guarantee, could tack on to Reagan's statement: "But when a laissez-faire run amuck threatens a systemic breakdown, government is the solution." Of course the administration could never be so blunt. It would be heretical, and Bush and his team are no heretics — they see themselves as laissez-faire's faithful servants.

But for those in the GOP who possess a purer faith in laissez-faire, the Bush Executive Branch is not slow to express its scorn. Take the brush off that Secretary of the Treasury Henry Paulson gave to a senator who believed that the administration had forsaken the problem of moral hazard — a key tenet of market fundamentalism which argues that risk being an essential aspect of achieving market equilibrium, government should not bail out business since to do so would take away from business the sobering effect of the prospect of utter failure.

At a Senate hearing on July 15, Secretary Paulson, perturbed that pressing questions from Republican Sen. Jim Bunning of Kentucky had led him to admit that the taxpayer bore the ultimate responsibility for back stopping Freddie Mac and Fannie Mae, dismissively challenged the Senator to "come up with a better plan."

That Bunning did not proffer one is not surprising; consternation can compromise inventiveness. He exclaimed at the hearing that "socialism is alive and well in America," but the actions taken with Bear Sterns and with Freddie and Fannie, far from indicating any kind of socialist wave, are rather stopgap measures that, ironically enough, but for the success enjoyed in recent decades by rightist economic doctrine in getting its ideology implemented into policy by decision makers from both political parties — would never have been either needed or proposed.

Had the federal government more stringently regulated investment banks like Bear Sterns, and housing giants Freddie Mac and Fannie Mae, requiring them to be more capitalized, matters would not have come to such a head. But regulation was anathema to market fundamentalists such as Alan Greenspan, whose misplaced faith in an unleashed market's ability to achieve a pain free equilibrium now seems very naive. And in fairness, it must be said that too many Congressmen — of both Parties — let lobbyists of Freddie and Fannie rather than the public good dictate their course of action.

The electorate, although it may support as necessary measures what functionally amount to Federal bail-outs of Bear Sterns and Freddie and Fannie, does not do so without anger, for voters are exasperated by what laissez-faire economics has wrought. That paradigm — so dominant since the late 1970s, and which the Democratic interlude of the Clinton presidency did little to abate and indeed often encouraged — is now crumbling, and the electorate — designated as the economy's backstop — is rightfully resentful at being left responsible for sweeping up the paradigm's detritus. Mounting among the electorate is the feeling that for too long the federal government has been a sleepy watchdog, allowing fat cats to have too free a rein over the marketplace.

The political implications for the GOP of this growing reaction against an unleashed, unregulated marketplace are dire, for that credo has been a huge part of its brand identity. President Bush, although he has over the past year called for greater capitalization requirements for Freddie Mac and Fannie Mae, has been a particularly enthusiastic advocate in word and deed of a "government hands off" approach to the economy.

As for John McCain, he has been out of sync with the growing reaction against laissez-faire. Despite the problems last fall with tainted toys and contaminated pet food imported from China, and the February recall of over 143 million pounds of meat by the Westland/Hallmark Meat Company, the largest meat recall in our nation's history, McCain, in a March interview on the CBS program 60 Minutes, reiterated his commitment to the conservative GOP value of less government regulation. But his words lacked persuasiveness; missing was the tone of conviction that comes from having thought matters through deeply on a topic — not surprising given that the senator himself has said that economics was not his strong suit.

Not long after McCain expressed his support for less government regulation, one who does possess considerable weight on economic matters, no less an exemplar of gravitas than octogenarian Paul Volcker, head of the Federal Reserve under President Reagan, argued, that the economy needed not less but more governmental regulation. In a speech before the august Economic Club of New York, Volcker, having no use for the financial machinations of a laissez-faire run wild, lamented "a demonstrably fragile financial system that has produced unimaginable wealth for some, while repeatedly risking a cascading breakdown of the system as a whole."

Clearly then, Volcker, at the helm of the Fed at the launching of the Reagan Revolution, has little use for the foolhardy course upon which its free marketers, with some buccaneers aboard as well, set sail. Their ship, the Laissez-faire, now shorn by icebergs of its own making, is fast taking on water. Too busy bailing out that water — to wit Bear Sterns and Freddie and Fannie — and too flummoxed to contemplate an outright abandonment of the laissez-faire, the crew cannot see that through the foggy air there awaits, ready to forge a bold new course, another ship, the 21st century, fueled by a vision of the public good and a harnessing of bountiful green resources.

Fred Jordan, who has an MBA from the University of Memphis, is associate professor of history at Nashville State Community College. E-mail: fred.jordan97@yahoo.com.

http://www.tennessean.com/apps/pbcs.dll/ar...27/-1/ARCHIVE01

[panamania79 2]

By FRED JORDAN • August 23, 2008

Most voters now find rather stale the "government stay out of business," laissez-faire economic credo of market fundamentalism. And, to put it frankly, even in the Republican Party there are doubts about market fundamentalism's capacity to meet boldly the challenges facing our 21st century economy. Although the party continues to pledge its loyalty to its long-time laissez-faire economic dogma, these professions of faith seem increasingly forced and lacking in conviction.

The certainty so evident at the dawn of the Reagan Revolution is gone. Standing at the inauguration podium in January 1981, Ronald Reagan proclaimed "government is not the solution; it's the problem." But the George W. Bush administration, in acting to salvage Bear Stearns in March, and now having fast tracked through Congress its plan to back stop the trillions in mortgages which Freddie Mac and Fannie Mae either own or guarantee, could tack on to Reagan's statement: "But when a laissez-faire run amuck threatens a systemic breakdown, government is the solution." Of course the administration could never be so blunt. It would be heretical, and Bush and his team are no heretics — they see themselves as laissez-faire's faithful servants.

But for those in the GOP who possess a purer faith in laissez-faire, the Bush Executive Branch is not slow to express its scorn. Take the brush off that Secretary of the Treasury Henry Paulson gave to a senator who believed that the administration had forsaken the problem of moral hazard — a key tenet of market fundamentalism which argues that risk being an essential aspect of achieving market equilibrium, government should not bail out business since to do so would take away from business the sobering effect of the prospect of utter failure.

At a Senate hearing on July 15, Secretary Paulson, perturbed that pressing questions from Republican Sen. Jim Bunning of Kentucky had led him to admit that the taxpayer bore the ultimate responsibility for back stopping Freddie Mac and Fannie Mae, dismissively challenged the Senator to "come up with a better plan."

That Bunning did not proffer one is not surprising; consternation can compromise inventiveness. He exclaimed at the hearing that "socialism is alive and well in America," but the actions taken with Bear Sterns and with Freddie and Fannie, far from indicating any kind of socialist wave, are rather stopgap measures that, ironically enough, but for the success enjoyed in recent decades by rightist economic doctrine in getting its ideology implemented into policy by decision makers from both political parties — would never have been either needed or proposed.

Had the federal government more stringently regulated investment banks like Bear Sterns, and housing giants Freddie Mac and Fannie Mae, requiring them to be more capitalized, matters would not have come to such a head. But regulation was anathema to market fundamentalists such as Alan Greenspan, whose misplaced faith in an unleashed market's ability to achieve a pain free equilibrium now seems very naive. And in fairness, it must be said that too many Congressmen — of both Parties — let lobbyists of Freddie and Fannie rather than the public good dictate their course of action.

The electorate, although it may support as necessary measures what functionally amount to Federal bail-outs of Bear Sterns and Freddie and Fannie, does not do so without anger, for voters are exasperated by what laissez-faire economics has wrought. That paradigm — so dominant since the late 1970s, and which the Democratic interlude of the Clinton presidency did little to abate and indeed often encouraged — is now crumbling, and the electorate — designated as the economy's backstop — is rightfully resentful at being left responsible for sweeping up the paradigm's detritus. Mounting among the electorate is the feeling that for too long the federal government has been a sleepy watchdog, allowing fat cats to have too free a rein over the marketplace.

The political implications for the GOP of this growing reaction against an unleashed, unregulated marketplace are dire, for that credo has been a huge part of its brand identity. President Bush, although he has over the past year called for greater capitalization requirements for Freddie Mac and Fannie Mae, has been a particularly enthusiastic advocate in word and deed of a "government hands off" approach to the economy.

As for John McCain, he has been out of sync with the growing reaction against laissez-faire. Despite the problems last fall with tainted toys and contaminated pet food imported from China, and the February recall of over 143 million pounds of meat by the Westland/Hallmark Meat Company, the largest meat recall in our nation's history, McCain, in a March interview on the CBS program 60 Minutes, reiterated his commitment to the conservative GOP value of less government regulation. But his words lacked persuasiveness; missing was the tone of conviction that comes from having thought matters through deeply on a topic — not surprising given that the senator himself has said that economics was not his strong suit.

Not long after McCain expressed his support for less government regulation, one who does possess considerable weight on economic matters, no less an exemplar of gravitas than octogenarian Paul Volcker, head of the Federal Reserve under President Reagan, argued, that the economy needed not less but more governmental regulation. In a speech before the august Economic Club of New York, Volcker, having no use for the financial machinations of a laissez-faire run wild, lamented "a demonstrably fragile financial system that has produced unimaginable wealth for some, while repeatedly risking a cascading breakdown of the system as a whole."

Clearly then, Volcker, at the helm of the Fed at the launching of the Reagan Revolution, has little use for the foolhardy course upon which its free marketers, with some buccaneers aboard as well, set sail. Their ship, the Laissez-faire, now shorn by icebergs of its own making, is fast taking on water. Too busy bailing out that water — to wit Bear Sterns and Freddie and Fannie — and too flummoxed to contemplate an outright abandonment of the laissez-faire, the crew cannot see that through the foggy air there awaits, ready to forge a bold new course, another ship, the 21st century, fueled by a vision of the public good and a harnessing of bountiful green resources.

Fred Jordan, who has an MBA from the University of Memphis, is associate professor of history at Nashville State Community College. E-mail: fred.jordan97@yahoo.com.

http://www.tennessean.com/apps/pbcs.dll/ar...27/-1/ARCHIVE01

I hope so.

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Not long after McCain expressed his support for less government regulation, one who does possess considerable weight on economic matters, no less an exemplar of gravitas than octogenarian Paul Volcker, head of the Federal Reserve under President Reagan, argued, that the economy needed not less but more governmental regulation.

Volcker endorsed Obama during the primaries. So people, excuse me if I don't take McCain's word or Palin's word on Obama's lack of readiness to lead this economy. If Volcker says the man can do it, he can do it. Volcker is brilliant.

"After 30 years in government, serving under five Presidents of both parties and chairing two non-partisan commissions on the Public Service, I have been reluctant to engage in political campaigns. The time has come to overcome that reluctance,” Mr. Volcker said in a statement today. "However, it is not the current turmoil in markets or the economic uncertainties that have impelled my decision. Rather, it is the breadth and depth of challenges that face our nation at home and abroad. Those challenges demand a new leadership and a fresh approach."

He concluded: "It is only Barack Obama, in his person, in his ideas, in his ability to understand and to articulate both our needs and our hopes that provide the potential for strong and fresh leadership. That leadership must begin here in America but it can also restore needed confidence in our vision, our strength, and our purposes right around the world."

[Mr. Big Dog 10,747]

Not long after McCain expressed his support for less government regulation, one who does possess considerable weight on economic matters, no less an exemplar of gravitas than octogenarian Paul Volcker, head of the Federal Reserve under President Reagan, argued, that the economy needed not less but more governmental regulation.

Volcker endorsed Obama during the primaries. So people, excuse me if I don't take McCain's word or Palin's word on Obama's lack of readiness to lead this economy. If Volcker says the man can do it, he can do it. Volcker is brilliant.

"After 30 years in government, serving under five Presidents of both parties and chairing two non-partisan commissions on the Public Service, I have been reluctant to engage in political campaigns. The time has come to overcome that reluctance,” Mr. Volcker said in a statement today. "However, it is not the current turmoil in markets or the economic uncertainties that have impelled my decision. Rather, it is the breadth and depth of challenges that face our nation at home and abroad. Those challenges demand a new leadership and a fresh approach."

He concluded: "It is only Barack Obama, in his person, in his ideas, in his ability to understand and to articulate both our needs and our hopes that provide the potential for strong and fresh leadership. That leadership must begin here in America but it can also restore needed confidence in our vision, our strength, and our purposes right around the world."