Short Term Memory in the Body Politic

If you knew, or really have been presented with all of the relevant evidence, of a political philosophy that, when implemented, would crash the value of your home, significantly erode your buying power and make the rich a whole lot richer while your net worth crashed and burned, would you elected politicians whose platform is nothing more than a fundamental reinstatement of clearly failed policies?

The myth of a “free market” faced the challenge of large-capacity, high speed computers accessible only to the most wealthy trading firms to implement pre-programmed “flash trades,” the existence of mega-funds available only to those with millions to invest able to buy, restructure and sell companies at huge profits (while leaving them with too much debt), the very limited regulation of derivatives, price-and-interest-rate fixing among the biggest financial institutions… and the list goes on and on and on. There is no “free market,” only insiders and “others.” Traders don’t invest for the long haul, just to play the game to maximize momentary market glitches to their benefit. And the more deregulated the financial markets have been, rather clearly, the more volatile and unstable they have become. We talk of bubbles and booms, not sustainable economic value these days. The future is just too risky to care about if you live on Wall Street.

If you want a microcosm of how quickly folks forget, you only have to look at tiny Iceland (with a population around 322 thousand) to see this phenomenon in action. The Independence and Progressive Parties – the center right parties that fomented massive deregulation, allowed their banks to leverage themselves into literal oblivion and created a society that borrowed enough to generate countrywide insolvency – just threw out their successors in an election on April 27^th. The complaint about the center left coalition – led by the Social Democrats – that they just didn’t fix the problem created by their center right predecessors fast enough.

Independence and Progressive “capitalized on unhappiness with crippling levels of personal debt that have left many homeowners owing more on their mortgages than they originally borrowed. The parties promised to forgive or renegotiate such loans and to put an end to four years of austerity by lowering taxes, ending capital controls and stimulating foreign investment.” New York Times, April 28^th. So the cure for the universal collapse caused by the center right is to… er… reelect the folks who caused it? Not that the cure was particularly well-thought out either.

Indeed, as conservative trends have swept through the U.K., Germany and even some of the most troubled European Union debt-laden countries, it is strange that the body politic would call on the same parties who deregulated business to allow the financial collapse in the first place to lead them out of the woods. The right-of-center austerity mantra – strict adherence to the German mandate for “sound” fiscal and monetary growth – has trashed European growth rates (recreating true recession all across Europe), pressed unemployment rates to record highs (and still rising), resulting in even the IMF and the World Bank call for an easing of these policies of economic strangulation. These conservative policies have done nothing to alleviate the debt burdens that they were intended to address, because the economies that were supposed to generate the cash flow to pay that debt have contracted instead.

So you’d think that U.S. politicians would look at all these failed policies and learn from their mistakes. You’d think they’d know that slamming the brakes on government spending before consumer confidence replaces government demand would create contraction not growth. You can see it in the numbers. Economists were predicting that the first quarter U.S. GDP growth would probably be 3.2%, but with the “sequester” cutbacks, that number shaved back to an actual 2.5%, a large 21% less than hoped. Reading and studying history don’t appear to be Congress’ long suit.

I’m Peter Dekom, and we learn the hard way, learn the hard way, learn the hard way…