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The Progressive

Bush Sells Free Market as Cure-All, Despite Crash

Matthew Rothschild

On Thursday, Bush gave a speech in New York about the financial crisis, and it was a laughable ode to the free market.

It sure was an odd time for such an ode, since the free market is crashing down upon us.

Ever incoherent, Bush himself admitted as much.

"I'm a market-oriented guy, but not when I'm faced with the prospect of a global meltdown," he said.

And so he enumerated the market interventions that his administration has already taken. He talked about the need to "make our financial markets more transparent"- though his bailout is anything but. And he even called for more regulation.

But then he went back to singing his ode.

"The greater threat to economic prosperity is not too little government involvement in the market," he said. "It is too much government involvement in the market."

This is economic idiocy at a time of global collapse, and to utter it, Bush had to distort the cause of the collapse, blaming a lot of it on Fannie Mae and Freddie Mac and denying that it was caused by "greed and exploitation" or "a failure of the free market system."

Nice try, George.

But that's exactly what it was: A failure of cowboy capitalism. Deregulation come a cropper.

Bush can deny it all he wants. But the evidence is right in front of us.

This is what happens when you knock down the wall between commercial banks and other financial institutions, as Bill Clinton and Robert Rubin did by abolishing Glass-Steagall.

This is what happens when you allow Wall Street to issue all sorts of clever derivatives and swaps that are unregulated, as Bill Clinton (with encouragement from Larry Summers) did when he signed Phil Gramm's Commodities Futures Modernization Act.

This is what happens, in short, when you believe in the Reagan-Clinton-Bush ideology that big government is bad and that any regulation is suspect and that the free market will regulate itself.

Hell, even Alan Greenspan has given up on that now.

But not Bush.

He not only reiterated his mindless praise for the free market's economic magic. He swore that the free market confers all sorts of other blessings.

"If you seek economic growth, if you seek opportunity, if you seek social justice and human dignity, the free market system is the way to go," he said.

This equation of unfettered capitalism with social justice is about as erroneous as they come. Read Naomi Klein's "Disaster Capitalism" for chapter and verse. Or look at the role of the free market in Pinochet's Chile. It didn't bring social justice or human dignity. It thrived on repression. Or take Yeltsin's Russia and the shock therapy of capitalism, which, by the way, Lawrence Summers insisted on. It didn't bring social justice or human dignity. It brought mass poverty.

Bush is an evangelist for capitalism, but the proof of its miracles has vanished. So he tried to make his case in the negative, by holding up the Soviet Union and Cuba as counter-examples.

He evidently hasn't heard of Scandinavia, which has a much more mixed economy than the United States, and a much more expansive social safety net, with a lot more social justice and human dignity than we have. But the model of democratic socialism, or a tamed free market, doesn't interest him. In his world, there is but predatory capitalism and communism.

Fortunately, the world is passing him by.

Barack Obama has a rare opportunity to lead the United States away from predatory capitalism.

And yes, that means more government involvement in the economy-and in restoring the safety net. It's an economic imperative-and a moral imperative.

Because you can't have social justice and human dignity with mass unemployment, rampant foreclosures, high rates of poverty and food insecurity, and a health care system that leaves almost 50 million people uninsured.

The snake-oil peddlers of the free market-Reagan, Bush I, Bill Clinton, Lawrence Summers, Robert Rubin, Bush II, Alan Greenspan, Henry Paulson-have all had their day.

Adios. And good riddance.

Now Obama must bring in a new team, one that is not in the thrall of the free market.


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Note from The Progressive's editor: Matthew Rothschild was on Democracy Now! on October 7 debating Army Col. Michael Boatner, USNORTHCOM future operations division chief.

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