Is a new progressive era ahead?
That may come as a surprise to market absolutists and others who see economic history and their view of economic progress as a straight line towards privatization. In fact, periods of economic conservatism and liberalism -- the latter also known as progressive reform -- have cycled for much of the nation's history.
For Brooks, those economic blinders help explain both the market absolutists' befuddlement at the financial crisis around them and their inability to adapt to the electoral demands brought on by the crisis. Market absolutists are in a straightjacket of a party that is ailing and part of a conservatism that is behind the times, he says.
On the cycle's timing, economist David H. Wang argues that the old era ends and the new era begins not when social pressures build from the bottom-up, but when institutions -- like investment banks, mortgage lenders and credit default swap issuers -- fail from the top-down.
"The era of anti-government, trickle-down Reagan economics died not due to a rise in poverty and a reduction in the standard of living for most Americans, but when major banks and institutions needed a rescue," Wang said. "Further, the era of the market absolutists had to end because a lack of a rescue would have produced something far worse than the rescue."
Economic Analysis: The task for public officials now is to clarify and sort out what caused the crisis and propose effective remedies. Was the financial crisis caused solely by reckless bankers and Frankenstein-like mortgage backed securities and other derivatives, combined with a lack of accountability for mortgages and toxic assets? Or did structural problems in the U.S. economy -- too many working citizens with incomes inadequate to support economic growth, let alone monthly payments for reset mortgage rates -- cause those mortgage bonds to fail in the first place? If it's the latter, there's a great deal of reform up ahead -- reform the likes of which the nation has not seen since FDR and the New Deal.
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Reader Comments (Page 1 of 1)
11-05-2008 @ 6:02PM
Iridium said...
In the first modern progressive era we got the establishment of the federal reserve, progressive income tax, a major revamp of the supreme court to pass through progressive legislation, social security, and a myriad of other social programs. All of which have caused untold damage to our economic system.
In the second progressive era we saw a major expansion of welfare dooming an entire class to abject slavery to the US government in order to buy votes. A rise to 20% mortage rates, gas lines, and an era of stagflation.
The attempt at a third progressive era was thwarted by the republicans taking over the legislative branch. If not for that we would have seen government health care, an even further expansion of welfare, and complete federal control over schools.
Obama is going to try and renew the 3rd progressive era. The policies put in place will destroy the middle class forever and ensure a supreme court that will rip the constitution to pieces and forge a new document based on the Communist Manifesto.
Any return to progressive policies will just continue to put the USA further in the hole of repackaged communism. Every problem we have in the current crisis can be traced to progressive era policies.
Progressive policies are passed to enrich the obscenly wealthy and punsih the middle class, the class that can think for itself. Progressives seek to steal from the middle class to pay the poor. By keeping the poor pacified the progressives can continue to whore wealth for themselves.
11-05-2008 @ 7:09PM
Dan Barnett said...
I thought the first Progressive era got us laws against child labor, pure food & drugs, and votes for women.
& by the way Social Security was passed in the 30's not the teens. Unless it is to be argued that the first Progressive era ran from say 1905 through 1941.
11-06-2008 @ 9:10AM
Jerry said...
STOP CORPORATE SOCIALISM NOW ! ! !
The Rebulicans talk out of both sides of thier mouths. They preach "FREE MARKETS" then they protect their corporate friends with bailouts. Don't beleive their lies. They have become corrupt and evil entities. The say entilements are wrong but then they give them to their friends. This is criminal behavior and should be punished. Take their fortunes away. Take America back from the corporations and give it back to the people.
12-14-2008 @ 11:08AM
Roy E Pearson said...
The causes of the "Meltdown" are several and all of equal importance.
1. Economics is not a science. The Scientific Method can be applies but that has limits. At Best Economics can try to explain what happened and maybe predict as much as one can predict about social interaction. The later has strong limits.
2. Money is a man made device that represents real value. Money made by manipulating money is devalued to the degree of manipulation. False money is created that at some point has to disappear. The lesson for society is that the false money rarely disappears from the hand of the manipulator. That leaves the rest of society to bear the loss. Credit is also false money and is a necessary evil in a large economy, but credit has to have limits.
3. There is no top or bottom of the economy all participants are equally important and the neglect of any sector will bear ill-effects. The man who toils the field is just as important as the man who owns the field.
4. All theory aside the basic truth of the economy is that you address an imbalance where the imbalance occurs. The notion of controlling money supply by interest rates is dependent upon what result is needed in the economy. A downturn is not always addressed with lower interest rates. Lower rates tend to spur investment and higher rates tend to spur savings. In the current situation investment is not the problem. Why should a company invest when the consumer has no money? The solution here, short term is to get money directly to the consumer. That should be done with mortgage assistance, support for those already without jobs, and small rebates on taxes to people making less than $150, 000.00. All pensions and retirement funds need to have employee contributions guaranteed by the Government and any Corporation that accepts government assistance must agree to replace lost employer contributions from future earnings in a manner that does not limit the growth of the Corporation.
5. Money is made by creating value. Risk in inherent in life and the Risk avoidance schemes of the last 20 years are no better than the Alchemist attempts to turn Lead into Gold. From a scientific or a philosophic point of view both are notions of the ignorant. Risk avoidance is in fact just risk deference, and those who practice the folly should not ever be "bailed out" by those who do not. You work and lose, help should be offered, you gamble (risk avoidance schemes) and lose you should be on your own.
These are just a few of the internal measures that need to be addressed, but there are looming external realities that have to be addressed. The US will have to learn to be leaner and do with much less in the future. That "less" however will be sufficient and of greater value than the excess we just loss.