Wednesday, October 12, 2011

Panic of the Plutocrats (Paul Krugman)

Paul Krugman is always on-target (OK, with a few exceptions sometimes), but in some ways his NYTimes column on Monday was especially worth noting. It nicely captures some of the crazier aspects of public discourse in US politics right now.

I do have a small quibble with the title—which I assume was written by an editor, not by Krugman. Unfortunately, I'm not sure that "panic" is precisely the right word to capture the present sentiments of the American plutocracy and its propagandists.

Yes, there's a good deal of anger, defensiveness, phony outrage, and noisy paranoia about the rich being victimized and "demonized". And some of it is even genuine. For example, at a time when there is widespread and justified public outrage at Wall Street and big business, the Obama administration has gone way overboard in its efforts to reassure, accommodate, coddle, and assist them. With what result? Incredibly enough, it's clear that many businessmen and financiers genuinely believe that Obama and his administration are anti-business or even anti-capitalist. These beliefs are quite delusional, of course, but mass delusions can be significant social facts—especially when the people holding these delusions control a grossly disproportionate share of the country's wealth, and the right-wing judicial activism of the current Supreme Court has authorized them to use it for unlimited political spending.

But these hysterical reactions to even the mildest criticisms go together with breathtaking levels of arrogance, chutzpah, and feelings of entitlement. One can only imagine how they would respond if there were prominent national Republicans, like Teddy Roosevelt, railing against "malefactors of great wealth" ... or, for that matter, a Democratic President like Franklin Roosevelt denouncing them as "economic royalists". But we're far away from that, and the overall balance of public discourse is tilted way over in the other direction. Panic? Right now, it seems to me, plutocratic forces in US politics and public discourse are aggressive and self-confident and feel like they're on a roll. Still, I think Krugman is right to detect a certain degree of nervousness underlying this outlook, and they may have some cause to feel panicky if a serious political backlash against them starts to take shape. Let's hope so.

Selections from Krugman's column are below, or you can just read the whole thing.

—Jeff Weintraub

New York Times
October 9, 2011
Panic of the Plutocrats
By Paul Krugman

It remains to be seen whether the Occupy Wall Street protests will change America’s direction. Yet the protests have already elicited a remarkably hysterical reaction from Wall Street, the super-rich in general, and politicians and pundits who reliably serve the interests of the wealthiest hundredth of a percent.

And this reaction tells you something important — namely, that the extremists threatening American values are what F.D.R. called “economic royalists,” not the people camping in Zuccotti Park. [....]

[T]here has in fact been nothing so far to match the behavior of Tea Party crowds in the summer of 2009.

Nonetheless, Eric Cantor, the House majority leader, has denounced “mobs” and “the pitting of Americans against Americans.” The G.O.P. presidential candidates have weighed in, with Mitt Romney accusing the protesters of waging “class warfare,” while Herman Cain calls them “anti-American.” [....]

[JW: By the way, anyone who thinks that expressing outrage against Wall Street and bloated plutocrats is "un-American" clearly knows very little about American history.]

The way to understand all of this is to realize that it’s part of a broader syndrome, in which wealthy Americans who benefit hugely from a system rigged in their favor react with hysteria to anyone who points out just how rigged the system is.

Last year, you may recall, a number of financial-industry barons went wild over very mild criticism from President Obama. They denounced Mr. Obama as being almost a socialist for endorsing the so-called Volcker rule, which would simply prohibit banks backed by federal guarantees from engaging in risky speculation. And as for their reaction to proposals to close a loophole that lets some of them pay remarkably low taxes — well, Stephen Schwarzman, chairman of the Blackstone Group, compared it to Hitler’s invasion of Poland.

And then there’s the campaign of character assassination against Elizabeth Warren, the financial reformer now running for the Senate in Massachusetts. Not long ago a YouTube video of Ms. Warren making an eloquent, down-to-earth case for taxes on the rich went viral. Nothing about what she said was radical — it was no more than a modern riff on Oliver Wendell Holmes’s famous dictum that “Taxes are what we pay for civilized society.”

But listening to the reliable defenders of the wealthy, you’d think that Ms. Warren was the second coming of Leon Trotsky. George Will declared that she has a “collectivist agenda,” that she believes that “individualism is a chimera.” And Rush Limbaugh called her “a parasite who hates her host. Willing to destroy the host while she sucks the life out of it.”

What’s going on here? The answer, surely, is that Wall Street’s Masters of the Universe realize, deep down, how morally indefensible their position is. They’re not John Galt; they’re not even Steve Jobs. They’re people who got rich by peddling complex financial schemes that, far from delivering clear benefits to the American people, helped push us into a crisis whose aftereffects continue to blight the lives of tens of millions of their fellow citizens.

Yet they have paid no price. Their institutions were bailed out by taxpayers, with few strings attached. They continue to benefit from explicit and implicit federal guarantees — basically, they’re still in a game of heads they win, tails taxpayers lose. And they benefit from tax loopholes that in many cases have people with multimillion-dollar incomes paying lower rates than middle-class families.

This special treatment can’t bear close scrutiny — and therefore, as they see it, there must be no close scrutiny. Anyone who points out the obvious, no matter how calmly and moderately, must be demonized and driven from the stage. In fact, the more reasonable and moderate a critic sounds, the more urgently he or she must be demonized, hence the frantic sliming of Elizabeth Warren.

So who’s really being un-American here? Not the protesters, who are simply trying to get their voices heard. No, the real extremists here are America’s oligarchs, who want to suppress any criticism of the sources of their wealth.

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