The Political Folly of the Middle

Jim Bales here, with my thanks to Tom for the loan of his soapbox.

Megan McArdle has a new post up at The Atlantic, entitled “The Financial Folly of Fairness” that makes some important points, including:

The solution to the problem [of the Great Depression] turned out to be throwing money at it: going off the gold standard, devaluing, and guaranteeing everyone’s bank accounts. Oh, yes, there was moral hazard. There still is. What there aren’t, is bank runs that wipe out peoples’ life savings overnight, or an unemployment rate of 25%.

One can name dozens of examples of things that violate our sense of fairness and obligation, and thereby make us all richer, from limited liability to bankruptcy.

The “just world” described above is not some bourgeois paradise; it is the western world during the Great Depression. It was not a better world for everybody; it wasn’t even a better world for anybody that I can think of. After it had finished punishing people who made stupid decisions, it went on to wreak brutal vengeance on a lot of people who had been quietly minding their own business.

Sadly, she then tries to position this as steering between the Scylla of the Left and the Charibdys of the Right. She tries to contrast herself with most people (who are of one of the two extremes), claiming that they “may believe the part of it that supports some larger “fairness” agenda they’re committed to. But their support is almost always piecemeal: try getting a liberal who loves easy bankruptcy to give a second chance to bankers who made a few stupid money decisions, or convincing conservatives …” [Emphasis in the original]

Now, if anything constitutes giving a second chance to bankers who made many massively stupid money decisions, it is TARP. TARP didn’t just give banks a second chance; it gave bankers a second chance by leaving the leadership and ownership of participating banks in the hands of those whose actions caused the crisis.

If Ms McArdle is correct in characterizing liberals as unwilling to “give a second chance to bankers who made a few stupid money decisions”, then TARP must have passed with overwhelming Republican support and despite determined Democratic opposition.*

The final vote on TARP? In the House 73% of Democrats voted for the bill compared to 46% of Republicans. In the Senate 80% of Democrats voted for the bill compared to 69% of Republicans.

So, when the chips were down, liberals quite literally gave a second chance to bankers despite their massively stupid money decisions, decisions that damaged our economy and put millions out of work. Utterly unfair, but necessary, as the liberals recognized!

Ms McArdle does us all a service in reminding us to place the well being of our people ahead of our desire for fairness. However, she does us a disservice in pretending that there are two extreme views in our discourse.


For, in addition to the “folly of fairness” there is the “folly of the middle” — the belief that the safe course is the always the one between left and right, liberal and conservative, Democrat and Republican. In today’s America, one can embrace the middle only by twisting oneself into a pretzel. One must simply believe that liberals would never give a second chance to bankers who made stupid money decision, and not actually look at the evidence.

In today’s America, there is only one extreme view of import, the view embraced by the Republican Party. This is the belief that defeating Obama in 2012 is “the single most important thing we want to achieve”, far more important than creating jobs for those who wish to work but cannot find employment.

The moderate position in today’s America is the Democratic position. Today’s Democratic party has been — and is even now — striving to protect “people who had been quietly minding their own business” from having “brutal vengeance” wrecked upon them. They are not succeeding because of the consistent and systematic obstruction of the Republican Party.

It is not enough to reject the “folly of fairness”. We must also reject the “folly of the middle”. The two parties are not cut from the same cloth, and we cannot pretend otherwise.

Best,

Jim Bales

[*] One might claim that Democrat is not synonymous with “liberal”. I will simply note that Democrats in White House and Congress are actually in a position to change people’s lives, while the extreme liberals who might otherwise fit Ms McArdle’s description lack that power. To ignoring Democrats while fretting about the out-of-power hyper-liberals is another contortion required to embrace the folly of the middle.

Image:  Henri de Toulouse-Lautrec, Folies Bergere: The Brothers Marco, c. 1895

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