Are R's & D's Equally To Blame For The Current Financial Crisis? (AKA, The 50/50 Argument)

[ihavenobias]

Is there some degree of fault on both sides for the financial mess? Yes, of course! And yes, it's easy for either side to dismiss the other entirely while ignoring their own deficiencies.

With that said, I also think it's incredibly lazy to generically say "both sides are equally to blame". I hear this constantly, especially from relatively uninformed (but generally well meaning) people. And of course some Republicans say it to cover their asses. And some Democrats say it in an effort to seem reasonable and fair. And cynics say it because they always assume the worst, and what's worse than believing that every single individual in government is corrupt?

That's what I call false equivalence, or The 50/50 argument. Factually speaking, neither side is entirely to blame or entirely blameless so to simplify things let's just call it even and split the difference. But the reality is that life is almost never 50/50. It's rarely 100/0 or 90/0, but 50/50 is equally if not more absurd in some ways.

The Bottom Line here is that it was flawed Conservative Ideology that created this economic mess (, despite ). Massive deregulation coupled with huge tax cuts for the rich (among other things) are not and have never been progressive ideals traditionally associated with the Democratic Party. But yes, unfortunately there were *conservative* Democrats who, for example, helped really get the ball rolling. And yes, Bill Clinton () DID sign some very damaging BS into law. And yes, to this day there are far too many Dems getting far too much money from far too many special interest groups that don't have OUR interests at heart (public financing anyone?).

So while it's true the culprits may wear both R's and D's on their respective sleeves, it is NOT true that it's all "50/50".

PS---Nobel-laureate economist Joseph Stiglitz wrote what might be the best article to date on how we got into this mess for Vanity Fair:

[Fovea]

1. Newt Gingrich, Phil Gramm, Tom Delay,

let's call it 75/25.

[Mnemosyne]

27. Even just reading those criminal's names grates on my last nerve.

:hi:

[20score]

2. Well said! K&R. This false equivalency always bothered me and I wish the media would stop pushing it

[FiveGoodMen]

3. The 'not Jimmy Carter' link is especially helpful!

Put it this way: it's not 50/50 between Ds and Rs although it's not 100/0, either.

But...

It is pretty much 100/0 between free-market fundies and, well, everyone who isn't one of them.

[sendero]

4. Absolutely not..

... it is 80%-90% Republican. And polls show that even dumbass Americans get that.

They are trying but they cannot walk away from their deregulate, deregulate, deregulate mantra - and they got what they wanted and a catastrophe is the result.

[JDPriestly]

5. Have you read the article, Infinite Debt by Thomas Geoghegan

in the April Harper's yet? I think it gives a much better explanation. Allow me to summarize it with the caveat that my summary cannot begin to do it justice.

Thanks to a 1978 Supreme Court decision that emasculated usury laws and allowed banks, in effect, to charge unlimited interest rates, financial sector profits or anticipated profits began to exceed profits from the manufacturing sector. The promise of higher profits caused investors to move their money from manufacturing to financial products. In order to make a profit competitive with the that being made by financial institutions, manufacturers sought cheaper and cheaper labor, and eventually shipped their equipment overseas to third world countries where they could produce products with close to slave labor.

American workers were forced to find jobs (often at lower wages) in the service sector, jobs ranging from serving burgers or Chinese salad at the local fast food joint to jobs fixing computers for the local supermarket to law to banking to derivative trading.

I think this analysis is supported by the historical record. In another article in Harper's archives dated January 1932, I believe, I read that in 1932, we were the world's great creditor. Our manufacturing base was strong. That was the Great Depression.

Today, we are the world's great debtor. We have virtually no manufacturing base. And why? Because we sold our souls to the "financial industry." Folks, finance is not an industry. It produces nothing, neither food, nor clothing, nor weapons, nor anything else that is useful. Yet, our entire economy is based on the "financial industry."

For years now, we have been living in an illusion of prosperity. In fact, India and China, Saudi Arabia, and other such countries have prospered. We impoverished ourselves. But, since it would have been professional suicide for any leader, whether in the media or the government, to point out this obvious fact, we continued to live as though we were wealthy.

What should we do? Here are Geoghegan's suggestions:

1. Pass a new type of usury law capping interest at 9% and allow exemptions of up to 20% upon a showing that the institution requesting the exemption has not been found guilty of fraud or bad faith in its practices.
2. Have state-owned banks similar to those in Germany and Austria.
3. Have at least one or two "public guardians" appointed to the board of each financial firm or bank that has received federal money. Instruct the guardians to make sure that the firms are investing in some manufacturing .
4. Require banks to help consumers get out of debt, going so far as to even cancel some of the debt. Lots of creditors have, in fact, already recouped what they loaned plus a reasonable rate of interest. Thanks to usurious interest rates, borrowers remain in debt.
5. Find a way to "inject equity" into working people's accounts. I'm not sure I understand what Geoghegan is talking about here, maybe the Bausparvertraege that are common in countries like Austria.

Anticipating conservative criticism that his plan is socialist and immoral, Geoghegan responds: "What's immoral is to pump up demand, as we have, by handing out easy money at high interest and driving people into debt."

I am not so sure I agree with all of Geoghegan's recommendations for correcting the situation, but I firmly believe that his analysis of the causes of the situation is the best I have read yet.

I strongly suggest reading this article. It is well worth the cost of the magazine in my opinion.

I have no link with Harper's other than that I avidly read it.

[ihavenobias]

11. No, but it sounds so good I may have to break down and buy it.

Although I *still* think it can co-exist with Stiglitz's brilliant article, based on your description.

;)

[Mnemosyne]

28. "capping interest at 9%" is a reasonably just idea. You should post this as an OP, JDP.

I look forward to reading it all later.

Appreciate the info, thanks! :hi:

[davomartinez]

34. Thomas Geoghegan

JD, I have not read this article. I am in Germany right now and don't have access to a Harper's magazine.

I did a search on his name and found this post. I heard of him when I was listening to a podcast of the Leonard Lopate show from 3/17. He was one of the guests and I thought he was great. I will be looking for more info about him.

thanks for your info, David :)

[theFrankFactor]

6. Fuckin' A Right! The Dems should make this point often and strongly...

but they won't.

Well said Tom.

I spoke about this as well:
November 20, 2008
http://www.youtube.com/watch?v=uzLNc7IZU14

Under the larger umbrella of laissez-faire capitalism.

[ihavenobias]

14. Thanks for the link, I've seen that one before.

A lot of those youtube comments are terrible.

[Wetzelbill]

7. kandr

[pleah]

8. K&R

:) :thumbsup: :thumbsup: :thumbsup:

[eridani]

9. Enabling isn't quite the same as being a perpetrator

Therefore it has to be a lot less than 50%.

[matthewf]

10. k&r- good work!

[OhioChick]

12. K&R

:kick:

[bvar22]

13. Not entirely fair to blame "The Dems".

There is a wing of the Democratic Party that has consistently fought FOR the Middle Class, and consistently OPPOSED legislation that was hurtful to the Middle/Working Class, like NAFTA, CAFTA, Bankruptcy, IRW, seating of Alito/Roberts....

Then there is the wing of the Democratic Party (DLC, New Dems, Blue Dogs) who have consistently helped the Republicans in their War on the Middle Class. The Republicans could NOT have done it without the help of the "Centrist" Dems.

[JHB]

22. "Pro-business"

For Democrats it's one of the programs. For Republicans, it's the Operating System.

[ihavenobias]

24. Right

That was basically the point of my post. The uninformed "moderates" out there (not at DU, I'm talking about in every day life) don't get into the details. They just say "both parties are to blame". I hear it all the time.

Just about every time I stumble into a political clip from The View at Huffington Post, etc., I hear Whoopi making that point and it drives me nuts. She's drilling that idea into the heads of potentially millions of people.

[bvar22]

33. I would include the uninformed "moderates" at DU.

In fact, I find the phrase "uninformed moderate" to be redundant.

[ihavenobias]

35. I don't necessarily disagree.

Although we're entering a tricky area of semantics I think.

[midnight]

15. I won't even pretend to understand how these fools

deregulated the financial systems. Since we have had a repug. majority for over a decade I blam this on the fiscally conservative bunch. If they would have raised the kind of stink over this deregulation that they did over Monica we would all have more financial security. But it was traded away so the republicans could feel moral about marriage.

[lonestarnot]

16. Blue dogs are not dems they lie to themselves first and then to the public.

http://ga3.org/ct/c1NNwfs1rSRN/

"The DNC needs to make abundantly clear to the blue dog Democrats they
need to toe the line, support the president, or not expect any funding
from the national committee. They are traitors to the Democratic party
and what our party stands for. They are going to weaken our success in
making the changes we need, and ensuring the Republicans never again
have the power to damage this country beyond belief. I will never send
another dime to the national party until it has a long-term strategy to
place progressive candidates in every race (as Dr. Dean successfully
managed) and put the squeeze on these traitors. The bi-partisan party of
the WASHINGTON party needs to be extinct."

By a friend, who at the moment has more time than me, with whom I agree wholeheartedly!!!

K & R!

[ihavenobias]

25. That's what scares me about this new "centrist coalition".

They can derail Obama's whole agenda!

[Juan_de_la_Dem]

17. Great thoughts

Thanks for the link to the V Fair article.

[ShortnFiery]

18. This is NOT a battle between R and D but between "Corporatist" R and Blue Dog Ds and EVERYONE ELSE!

[ihavenobias]

29. Unfortunately many in the general public don't dig that deeply.

They just say "both parties are to blame".

[autorank]

19. It was a joint effort - Glass Steagall repealed 9n 1999 then

the 106th, lame duck, laid the foundations for credit swap derivatives as unregulated profit centers
for the big boys. Both very bad moves - allowed this to happen. Who sponsored these - Republicans.
Who signed them, Clinton. One of them, the credit swap bill was approved unanimously by the Senate.

So, yep - the farking Con ideology is what got us here but there were happy campers from across the
aisle and at 1600 Pennsylvania Ave. pushing the cart along.

[GinaMaria]

20. K and R great job

[navarth]

21. K & R Well spoken, Tom. eom

[libodem]

23. I do believe this hearkens back

to the tax cuts for the rich and the huge revolving charge account funding that fruitless war effort in Iraq. They will never admit to the failure of the 'borrow and spend' plan of government. Well reasoned post.

[serrano2008]

26. All of government is equally to blame - forget the "R's & D's"

As much as I hate the Repubes, there are so many spineless, gutless, money hungry Dems that are just as much to blame as the Repubs are.

All of our politicans failed us and will continue to do so unless they are more closely regulated as well.

Capitalism isn't a problem if there are regulations.

[ihavenobias]

32. I guess we're getting into semantics.

But I think we both agree with deregulation and tax cuts for the rich are not traditional liberal/progressive/Dem Party values.

[dkofos]

30. YES

[ihavenobias]

31. Did you read the post or just the post title? n/t

[leftchick]

36. yes

period.

[ihavenobias]

37. That's letting conservative ideology off the hook far too easily IMO. n/t

[scarletwoman]

38. Okay, what would make you happier? 60/40? 70/30? 80/20? The fact is, Dems HAVE been complicit.

The Democratic party stopped being the party of the working class when FDR died. It's ridiculous to keep trying to prop up the fiction that Democratic politicians aren't just as much a part of the Ruling Class as Republican politicians.

The only difference is that the Democrats believe in throwing a few more crumbs to the proles to keep them quiescent than the Repugs do. The Repugs believe in controlling the proles through force and fear. The Dems believe in controlling the proles through small concessions.

sw

[ihavenobias]

39. I thought I made a fairly nuanced argument.

It's not about making me happy SW, it's about setting the record straight. And the fact is that conservative ideology WAS the cause of this failure at it's core. There was a toxic mix of true believers and greedy enablers.

Did far too many Democrats buy into that failed ideology, largely for financial/personal gain? Yes. So I'm not really sure where you think our disagreement is. A semantic one possibly.

[scarletwoman]

40. Setting the record straight means looking straight in the eye of the whole establishment assumption

that the "Business of America is Business". That's a philosophy shared equally by Dem and Repug alike. The bipartisan Ruling Class consensus is to protect the status quo, which means protecting the privileges of the financial elite.

I think your OP asked the wrong question. Yes, Reaganism greatly exacerbated the ills of capitalism, but the greater ills are in the system itself. That is, the relationship between government officials and the parasitic capitalist class.

Reaganism would not have succeeded if there had been a united force in our government standing firm for the protection of the working class.

sw

[ihavenobias]

41. I don't necessarily disagree.

Of course you could argue Reaganism wouldn't have succeeded without a mediocre media and far too many uninformed citizens (some by choice).

[scarletwoman]

42. Hey, I know we're on the same side -- & how can I argue with someone who has Vonnegut as his avatar?

I just think that the DC pols of both parties have pretty much always been in the pocket of the Owner Class, it just got more blatant with the rise of Reaganism. And the media wouldn't be the way it is today had corporate media consolidation not been enabled by both parties -- remember, the Telecommunications Act of 1996 happened under Clinton.

The reason that the GOP seems to make the most noise is because Dems don't fight back. And the reason Dems don't fight back is because they're beholden to very same capitalist forces. "Conservatism" is nothing more than a convenient label given to the philosophy of protecting the Owner Class against the rabble. It's a philosophy that's ultimately shared by both parties.

sw

[ihavenobias]

43. A Vonnegut fan!

You have good taste. :)

I guess I'm not *quite* as cynical as that, because I do think there is a mix of true believers and corrupt/selfish pols. For example, Russ Feingold is a real progressive IMO, as is Bernie Sanders. It's sad that we can count them on our hands, but still.

Same with some of the conservatives/libertarians. SOME of them actually believe the crap they say, as crazy as it is. But yes, many on both sides proclaim things while taking tons of money and doing the opposite. That's why real change requires a fundamental overhaul of how elections are funded, which neither party really wants (overall).

And here again, the mediocre (at best) MSM plays a large role too.

[Mike 03]

44. I don't even think this is a partisan issue at all.

A series of decisions were made, often by the Federal Reserve, with limited foresight, that resulted in greedy people taking advantage of loopholes (often, unrecognized loopholes) in how investment instruments could be constructed, packaged and sold.

I don't think this has anything at all to do with Dem or Repuke, etc...

[TheKentuckian]

45. I blame Republicans and the Republican minded to the tune of

about 90%. Most or our 10% is guilty of laying down and allowing it. We pushed for some opportunity for people to own a home but that only became a problem when coupled with extreme greed and no oversight.