I don't have a lot to say about the momentous events taking place this week with regard to American financial markets except to repeat some things I've said frequently before. It's a complicated mess--and of course some kind of government intervention is necessary--but it boils down to some fundamental ideas. One is that the people who are responsible will not be held responsible. The system is rigged in their favor; their cronies in government will cover their butts, and the best the rest of us can hope for is that there will be some impetus to make sure this kind of thing won't happen again--at least for a little while. (Or perhaps as Rick Perlstein points out, this crisis could be an opportunity like the one Roosevelt took in 1935. That or course depends on Obama getting elected and his choosing to seize the opportunity.)
But it will happen again. We never learn from our mistakes. There are always clever rationalizations to describe why this situation is not like previous situations. Remember how we were all instructed that Iraq is not Vietnam? In many respects it was not, but in the most important ways it was. And with regard to this financial markets meltdown it was completely predictable on the basis of knowing the consequences that follow from the rejection of the New Deal principles of social democracy and the embracing of economic Libertarianism. I've written time and time again in this space that what is now embraced as Libertarian economic approach is no different from the philosophy of the 19th Century Social Darwinians, and we're seeing that play out now.
There are, I'm sure, some principled Libertarians who are outraged that the government is stepping in to socialize the financial markets. But what did they expect? Do they really believe that the people who run these and other huge corporations have espoused Libertarian ideas about taxes and deregulation for any other reason than to remove restraints so they can do as they please? Do they also think that these same people ever considered that they should bear the consequences of their recklessness?
Of course not; they've been gaming the system all along using Libertarian jargon as their cover story. It's always been for these people maximum reward and minimum risk. Or to put it more bluntly--maximum reward for them knowing that the public would be forced to accept the risks and the negative consequences when they over-reached. And why shouldn't they over-reach if they knew that there would be no negative consequences to them?
I don't think there is anything on the American scene more foolish than a principled Libertarian. Principled Libertarians have been duped, and as I've written before (here and here) they are the unwitting enablers of tyranny. It's an iron-clad law of history, and you don't have to be a genius to understand it, just clearheaded enough to see what's right before your eyes: When you lift the restraints from the powerful, they aggregate power and wealth to themselves, and with that aggregated power and wealth they dominate the markets and the political system. When the markets deliver disaster, as they have in the last eighteen months, then their domination of the political system insures they will get bailed out and the rest of us foot the bill because the rest of us haven't power enough to insist on any other outcome.
Principled Libertarians can complain all they want that the power elites are not following the Libertarian principles, but it's the Libertarian script that gave the power elites the means to dominate the system so that there's no possibility of enforcing Libertarian principle. Libertarian philosophy is like a storeowner giving thieves the keys to his store but only on the condition that they promise not to rob him, and then when they do, the he is shocked, just shocked.