Seeking rents and magic misdirection
by digby
In the post below, David asks an interesting question:
Trickle-down economics is a known and proven failure. The experience of record stock market highs, record corporate profits, low effective tax rates and record income inequality in the context of a stagnant economy is all the proof anyone should need that the conservative theory of economics is a sweeping failure.
So why does it still constitute a valid opinion in the public square, even as creationism and climate denialism are increasingly laughed out of it?
He answers it with the fundamental truth that for a lot of people, government is seen as a simple tool to take their money and give it to people who don’t “deserve” it. I’d certainly agree that that’s how these ideas are sold to the people — by appealing to their baser natures.
But what’s really going on? It’s hard to believe the financial industry and the 1% see it in these simple terms? Not that they don’t believe wholeheartedly in their own moral superiority and the idea that their work ethic and contributions to the economy are so much greater than the polloi that they have earned their vast reserves of wealth.
But there must be more to it, right? They must have a reason for their dedication to austerity. And that reason is simple greed: the government is competing with them for “insurance” dollars. They are rent seekers and every time the government provides a service efficiently and at lower cost, it takes the provision of that “service” away from a private entity that could make a profit at it. All the propaganda about government being the problem and the private sector being the solution is in service of creating wealth for the rent-seekers. Obviously.
And by the way, guess who’s out there right now, helping them do it?
“While there is more work to be done, the team is operating with private sector velocity and effectiveness, and will continue their work to improve and enhance the website in the weeks and months ahead,” the administration wrote in a report outlining its success.
Here’s Chuck Todd and the Villagers, earning their money:
And we wonder where people get those crazy ideas? (Never mind that it was the private sector that fucked this up in the first place.) But if nothing else, the way the health care reforms are of huge benefit to the rent-seekers while simultaneously perpetuating the myth that the government is inept proves the point. They are very good at this one thing.
Anyway, there is a great deal of money to be skimmed by financial wizards and insurance company share-holders from health and pension programs. Everybody needs them. They’ve already managed to grab hold of virtually all the private pension management in this country and all that’s left is Social Security. By starving it of funds, they hope to force more and more people to put money into market based schemes from which they can siphon off even more profit. They see every penny the government extracts for the common good as stealing from them their rightful share.
So, there’s that, which most of you already know. However, I had not thought of this more recent rationale for their behavior, although it seems obvious now that I think of it:
Via the false deficit hysteric narrative of government’s fallibility, liability, and potential insolvency, Wall Streeters and those who identify with them attempt to distance themselves from the bubble-prone, leverage-dependent nature of their business and exonerate the Wall Street perpetrators of financial mayhem and distract from the systematic fraud at the heart of the Global Financial Crisis of 2007-2008. While there were and are calls for holding Wall Street accountable and restructuring the private securities business along the lines of the Glass Steagall Act of 1933, the deficit hysteria campaign has been counter-propaganda aimed at the would-be prosecutor and regulator of Wall Street, the US federal government. The moral and political outrage that should have been directed largely at Wall Street and its enablers in government, was instead diverted or countered by the falsely-premised, “fiscal responsibility” discourse.
That’s an excerpt from these two essays by Michael Hoexter at New Economic Perspectives, both of which are well worth reading.
It was always somewhat inexplicable to me that Wall Street was unable to see that it was killing its own golden goose over the long haul by failing to rein in these excesses. This explains why and I’m sort of surprised I didn’t put this together before now. It was misdirection.
And virtually everyone in our government helped them do it.