Tuesday, November 18, 2008

Kristol does Krugman

Paul Krugman's regular column didn't appear in yesterday's New York Times. So William Kristol kindly wrote Krugman's column for him.

At least it seems as if the neocon Kristol is channeling the left-of-center Krugman when, toward the end of his column, he suggests that conservatives, if they want to claw their way back into power, will need to ditch their dogmatic attachment to free market ideas and adopt a more . . well, . . . pragmatic outlook.

Here's Kristol:

I don’t pretend to know just what has to be done. But I suspect that free-marketers need to be less doctrinaire and less simple-mindedly utility-maximizing, and that they should depend less on abstract econometric models. I think they’ll have to take much more seriously the task of thinking through what are the right rules of the road for both the private and public sectors.

They’ll have to figure out what institutional barriers and what monetary, fiscal and legal guardrails are needed for the accountability, transparency and responsibility that allow free markets to work.

And I don’t see why conservatives ought to defend a system that permits securitizing mortgages (or car loans) in a way that seems to make the lenders almost unaccountable for the risk while spreading it, toxically, everywhere else. I don’t see why a commitment to free markets requires permitting banks or bank-like institutions to leverage their assets at 30 to 1. There’s nothing conservative about letting free markets degenerate into something close to Karl Marx’s vision of an atomizing, irresponsible and self-devouring capitalism.

If conservatives do some difficult re-thinking in the field of political economy, they can come back. If they don’t — well, there were a lot of admirable conservative thinkers and writers, professors and novelists, from 1933 to 1980. But conservatives didn’t govern.

I'm not sure how many free-market conservatives have rushed to the defense of securitizing mortgages, or the leveraging of bank assets at 30 to 1, as Kristol claims. I've never once heard such practices even debated among conservatives, much less passionately defended. Being a defender of free enterprise, the profit motive and economic freedom, broadly speaking, doesn't make one an apologist of everything that companies and financial institution do with their economic freedom. Most conservatives I know are quick to point out that freedom must walk hand-in-hand with responsibility. We just believe that the market, if left to its own devices, will sooner or later punish bad practices and bad actors -- which it would be doing right now, if the pragmatists and market interventionists weren't coming to the rescue.

Government had a larger role in creating this crisis than free markets or deregulation did. Yet Kristol, rather than telling this uncomfortable truth and mounting a defense of free enterprise, at a moment when its enemies are on the attack, retreats, and asks colleagues on the right to do likewise by "re-thinking" their economic ideas and values in a bid to win elections. But that's where the neo-con in Kristol really comes through.

Perhaps it shouldn't be the aspiration of true conservatives "to govern," in Kristol's words, since the battle to downsize the federal government has been lost, as far as I can tell, and all governing really means in the contemporary context is harnessing the leviathan to do one's bidding, rather than taming it in order to set people free.

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