By Jared Bernstein | bio
Conservative economic policy is dead. It committed suicide.
Its allegiance to market solutions, tax cuts and spending cuts, supply-side nonsense, manipulative and corrosive ties to industry and the rich, have left it wholly unable to cope with the challenges we face. Its terribly limited toolbox simply cannot address the economic insecurities and opportunities generated by today's global, interconnected, polluted, insecure, dynamic, bubble-prone economy.
What’s more, progressives have developed an alternative policy set with the flexibility to combine market forces with the necessary regulation and redistribution to address these challenges. Whether that agenda will ever see the light of day is another question.
First, an anatomy of the suicide of conservative economic policy.
Spend a few minutes with
Mitt Romney’s 23-point economic plan. Or, reflect on the message of the frontrunners at the last Republican debate, a message that reduces to: optimism, tax cuts, free trade, and vague spending cuts (one exception: Thompson wants to cut Social Security benefits for future retirees—a perfect example of a bad idea in an era of increased pension insecurity).
These ideas are wholly inadequate to the challenges posed by global warming, health care, globalization, inequality, bubbles in key sectors, and the many market failures we now face.
The fundamental flaw with conservative economic policy is its reliance on markets for problems that markets can’t solve. It is widely
recognized, for example, that consumer-driven health care, as in the President’s Health Savings Accounts, does not begin to address the challenge of health care reform. Similarly, while we can all agree that globalization has many positive attributes, simply calling for more “free trade” doesn’t address either
pervasive income losses to many Americans or the
unfulfilled promise of trade to the poor in developing countries.
moreOn the first day of Crisis the markets sold to me
A sub-prime bankruptcy.
On the second day of Crisis the markets sold to me
Two structured notes
and a sub-prime bankruptcy.
On the third day of Crisis the markets sold to me
Three French funds
Two structured notes
and a sub-prime bankruptcy.
On the fourth day of Crisis the markets sold to me
Foreclosure loans
Three French funds
Two structured notes
and a sub-prime bankruptcy.
On the fifth day of Crisis the markets sold to me
$500 gold callsForeclosure loans
Three French funds
Two structured notes
and a sub-prime bankruptcy.
On the sixth day of Crisis the markets sold to me
Six fleeced investors
$500 gold callsForeclosure loans
Three French funds
Two structured notes
and a sub-prime bankruptcy.
On the seventh day of Crisis the markets sold to me
Seven ‘bonds’ accruing
Six fleeced investors
$500 gold callsForeclosure loans
Three French funds
Two structured notes
and a sub-prime bankruptcy.
On the eighth day of Crisis the markets sold to me
Eight salesmen bilking
Seven ‘bonds’ accruing
Six fleeced investors
$500 gold callsForeclosure loans
Three French funds
Two structured notes
and a sub-prime bankruptcy.
On the ninth day of Crisis the markets sold to me
LBO refinancing
Eight salesmen bilking
Seven ‘bonds’ accruing
Six fleeced investors
$500 gold callsForeclosure loans
Three French funds
Two structured notes
and a sub-prime bankruptcy.
On the tenth day of Crisis the markets sold to me
Hedge fund Boards all leaving
LBO refinancing
Eight salesmen bilking
Seven ‘bonds’ accruing
Six fleeced investors
$500 gold callsForeclosure loans
Three French funds
Two structured notes
and a sub-prime bankruptcy.
On the eleventh day of Crisis the markets sold to me
Over-hyped underwritings
Hedge fund Boards all leaving
LBO refinancing
Eight salesmen bilking
Seven ‘bonds’ accruing
Six fleeced investors
$500 gold callsForeclosure loans
Three French funds
Two structured notes
and a sub-prime bankruptcy.
On the twelfth day of Crisis the markets sold to me
Central banks succumbing
Over-hyped underwritings
Hedge fund Boards all leaving
LBO refinancing
Eight salesmen bilking
Seven ‘bonds’ accruing
Six fleeced investors
$500 gold callsForeclosure loans
Three French funds
Two structured notes
and a sub-prime bankruptcy.
..all of which does omit, of course, “hysterical overblown relief rallies by equities”; “a craven capitulation on the part of monetary authorities to Wall Street’s narrower interests”; “disconcerting weakness at the long end of bond markets”; “rising inflationary pressure”; “the dangerous vulnerability of retailers to deteriorating consumer spending”; “flimsy fiat currencies”; “a scary succession of non-American national property markets waiting to soften, including but not necessarily limited to Australia, Belgium, Britain, Denmark, France, Ireland, Italy, Spain and Sweden”; and “defensive investing becoming paramount” – but then none of these coinages is particularly susceptible to rhyme.
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