The reason that people who can discern clearly what is afoot are so deeply disturbed is simple, and all the comments touch on it. The campaign to defend Geithner and Emanuel, both architects of the administration’s finance friendly policies has gone beyond what most people would see as spin into such an aggressive effort to manipulate popular perceptions that it is not a stretch to call it propaganda. ...The Keynesian faction of the capitalist ruling class is moribund. They no longer have a grip on the Democratic party. The Democratic party is attempting to compete head-to-head with the Republican party to represent the Randian faction: the Democrats' big selling point is their popular credibility, especially among the non-batshit-crazy non-fundamentalist Christian population.
[By 2009] The financial services industry had become systematically predatory. Its victims now extended well beyond precarious, clueless, and sometimes undisciplined consumers who took on too much debt via credit cards with gotcha features that successfully enticed into a treadmill of chronic debt, or now infamous subprime and option-ARM mortgages.
Over twenty years of malfeasance, from the savings and loan crisis (where fraud was a leading cause of bank failures) to a catastrophic set of blow-ups in over the counter derivatives in 1994, which produced total losses of $1.5 trillion, the biggest wipeout since the 1929 crash, through a 1990s subprime meltdown, dot com chicanery, Enron and other accounting scandals, and now the global financial crisis, the industry each time had been able to beat neuter meaningful reform. But this time, the scale of the damage was so great that it extended beyond investors to hapless bystanders, ordinary citizens who were also paying via their taxes and job losses. And unlike the past, where news of financial blow-ups was largely confined to the business section, the public could not miss the scale of the damage and how it came about, and was outraged.
The widespread, vocal opposition to the TARP was evidence that a once complacent populace had been roused. Reform, if proposed with energy and confidence, wasn’t a risk; not only was it badly needed, it was just what voters wanted.
But incoming president Obama failed to act. Whether he failed to see the opportunity, didn’t understand it, or was simply not interested is moot. Rather than bring vested banking interests to heel, the Obama administration instead chose to reconstitute, as much as possible, the very same industry whose reckless pursuit of profit had thrown the world economy off the cliff. There would be no Nixon goes to China moment from the architects of the policies that created the crisis, namely Treasury Secretary Timothy Geithner, Federal Reserve Chairman Ben Bernanke, and Director of the National Economic Council Larry Summers.
The problem, though, is that the Democratic party is losing its popular credibility among the sensible population. There's no viable alternative, so sensible people will mostly stay home on election day or make protest votes. Furthermore, the Republican party has made good progress solidifying a base of authoritarian submissives, who will tolerate a considerable amount of hardship for its own sake. Socialist, communist and anarchist politics have become so discredited that they exert no popular force. Unlike Roosevelt, Obama has no socialist left pushing him to meaningful reform of capitalism.
Keynesian economics is indeed crypto-socialism, socialism dressed in capitalist clothes. It features the essence of socialism: exerting social control over and appropriating social benefit from capital. It dresses socialism in the capitalist clothes of debt, regulation, and taxation, which would be in effect — if the people actually owned the capital in name — investment, management, and return. And unsurprisingly, because socialism really is more in line with economic reality than capitalism, even half-assed crypto-socialism actually works in the real world. The evidence is clear: for nearly a century, the more
Many members of the capitalist class are in a Prisoner's Dilemma. They know that a return to Randianism will result in half or more of the capitalist class dropping back to the professional-managerial middle class, the working class or even the unemployable. Randianism is definitely not in their mutual self-interest. On the other hand, if Randianism prevails, the capitalist class will punish the Keynesians; if Keynesianism prevails, the Randian faction will not be punished. No one in the capitalist class can support Keynesianism unless they're sure it can prevail, and only pressure from the people, now absent, can provide this certainty. The regression to Randianism is by now inevitable and unstoppable.
The United States is an interesting contrast to China. The United States in the mid to late 20th century had strong elements of socialism dressed in capitalist clothing. China, especially in the late 20th and early 21st century, has strong elements of capitalism dressed in communist clothing. It may be the case that the name is as important as the reality: China is now easily embracing strong Keynesian measures; their communism-in-name perhaps gives them the legitimacy to do so. In contrast the United States is failing to embrace Keynesian measures precisely because our capitalism-in-name does not give us that legitimacy. It may well turn out that China's communism-in-name gives it the social legitimacy to move to something resembling real socialism; Mao, despite a four decade interregnum, may have built stronger than even modern Western communists imagine.