Ideology: Convenient Untruths

Triumph of the Kleptocracy

Adam Smith famously noted that every nation that had relied upon deficit financing had paid with its strength or existence.

The practice of funding has gradually enfeebled every state which has adopted it. The Italian republics seem to have begun it. Genoa and Venice, the only two remaining which can pretend to an independent existence, have both been enfeebled by it. Spain seems to have learned the practice from the Italian republics, and (its taxes being probably less judicious than theirs) it has, in proportion to its natural strength, been-still more enfeebled.

It works for individuals and corporations as well.

It's probably not coincidental that a cardinal objective of the American, or rather, global, kleptocracy has been the enslavement of the country and the people to debt. We begin with the reign of Saint Reagan, rightly celebrated by the GK, above all for cutting taxes on the rich and raising them on middle class. Those were merely the outward manifestations of his glory, however. Probably more fundamental was his major expansion of debt. That debt consisted of two parts: the acknowledged public debt and the more hidden owed to entitlement programs - more hidden because President and Congress agreed not to count borrowings from the pension funds as part of the deficit.

Alan Greenspan was the chairman of the commission that agreed to use increased social security taxes to fund some of the deficit produced by Reagan's tax cuts for the wealthy. Oddly enough, that same Greenspan was pretty much on his good behavior during the Clinton years, doing his part to further Clinton's elimination of the budget deficit. With a new Bush in the White House, Greenspan's Randian demon was truly unloosed. Cut taxes, explode the deficit, he said. He had a message for the little people too: take out an adjustable rate mortgage! Never mind that interest rates are going up, up, up. Meanwhile, he and his like minded Bush appointees were busy gutting regulation of the banking and securities industries. Together with some timely modifications to the bankruptcy law pretty much reinstituting debt peonage, the stage was set for the really big show. Americans were now bombarded floods of offers of credit cards and home equity finance opportunities, with all the dirty details confined to really fine print.

The sub prime debt bomb detonated a bit prematurely, taking with it both the swindled and the less cautious of the would be swindlers. The credit card debacle is now also entering the big time. From the AP story by Rachel Konrad and Bob Porterfield:

Americans are falling behind on their credit card payments at an alarming rate, sending delinquencies and defaults surging by double-digit percentages in the last year and prompting warnings of worse to come.

An Associated Press analysis of financial data from the country's largest card issuers also found that the greatest rise was among accounts more than 90 days in arrears.

Experts say these signs of the deterioration of finances of many households are partly a byproduct of the subprime mortgage crisis and could spell more trouble ahead for an already sputtering economy.

So what led all these supposedly smart people (I don't mean Reagan, I mean his advisers) down this path to destruction? Was it simply greed, personal viciousness, and reckless disregard for the state of the nation? Probably not, for most, though that would fit a lot of Bushies. Greenspan has apparently taken exception to being called an ideologue, but the alternatives are mainly worse.

Ideology is mainly a belief in convenient untruths. Want to rape and pillage the economy? Maybe you can hide behind the invisible hand. Want to do some hard core defence profiteering? Probably only you can save the nation from some real or imaginary threat, while conveniently earning huge profits. If nothing else, there is always good old social darwinism. This one is especially relevant to crooks, swindlers, Alaska politicians, Enron executives, megachurch millionaires and other Republicans. There is a sucker born every minute, and only the genius of the truly free and unregulated market can free you take him.