Monday, October 8, 2012

Liberals Racing Over the Cliff

Here's what really has me gasping.  If you look at the finest lefties, from Marx to Habermas, they are trying to imagine a way for humans to get out of the trap of exploitation.  For Marx, the problem was the exploitative monster of capitalism and the answer was the wonder of socialism through revolutionary communism that would return to an age of true community.

For Habermas the problem is now the entire rational system world, business and government, that run by rules.  They are engaged on systematizing and colonizing the "lifeworld," the face-to-face communicative interaction between human and human.  The point of the systems world is that everything ends in an up-down decision, rationally arrived at.  But the lifeworld is a world were people oppose truth claims and come to a communicative consensus.

So look at the administrative wonderland of Dodd-Frank, the financial regulation that subsumes the financial system in a dense web of administrative oversight.  Writes Peter J. Wallison:
Dodd-Frank is by far the most comprehensive and restrictive financial regulatory legislation since the Depression era; its effect on regulatory costs for financial firms at all levels has been and will continue to be substantial, with severe adverse consequences for credit availability.

But that isn’t all. The Financial Stability Oversight Council — an agency established under Dodd-Frank and consisting of all the federal financial regulators — has now begun work on identifying the nonbank financial institutions that will be declared systemically important financial institutions (SIFIs).
The point is that the government will have enormous administrative power over the SIFIs, so they will naturally become crony capitalists currying favor with their overlords.  But there is more.
Title II of Dodd-Frank gives the secretary of the Treasury the authority to seize any financial firm he believes is likely to fail in the future and hand it over to the FDIC for liquidation. If the firm objects, the secretary can apply to a court for a ruling, but the court has one day to decide whether the secretary has acted unreasonably.
So the government now will have instant life-or-death power over any financial institution.

Now the whole point of the financial system, the credit system, is getting money from where it is to where it is wanted.  Now the government will be in the middle, thinking about the electoral consequences of the financial system and forcing the financial system to back up its political agenda.

Think Fannie, Freddie, and the Community Reinvestment Act.  The politicians really showed how good they are in running the mortgage financing system.  So now their political approach will be extended to the financial system as a whole.

What liberals want is to have administrative control over the whole of society.  They want to crush the lifeworld and bring everyone into a client relation to the government.

But the whole point of the left-wing critique for the last 200 years is to deal with the terrifying power of modern capitalism and modern government.

Yet the only solution that the moderate left can imagine to any problem is to jack up the power of government.

This can only end in tears.  Liberals will continue to gather power into the government in their frightened response to the disasters that their politics has caused.  But then the government will run out of money.

We can already see what happens next by taking a look at Europe.

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