Free Market Theory and the Conservative Movement

The adherence to “free market” principles has some limits that the “Conservative” cult fails to heed. One of the drawbacks of political ideology is that extreme passion too often misses or ignores fine distinctions. As Emerson has been frequently quoted, “A foolish consistency is the hobgoblin of small minds.” A free market does not necessarily mean that no regulation is appropriate. Nor does it mean that everything is for sale at the “market rate.”

Recent economic turmoil has exposes the folly and the discrepancies, if not outright hypocrisy, of the Conservative ideology. A prime example is the whining and begging by the finance industry [the engine of the Conservative – free market economy] for government bailouts after staggering losses in equity because of rapacious and predatory lending programs that raked in billions of dollars in profits. Bear Stearns recently reported a loss of nearly half its market capitalization, largely because of losses on bad mortgage lending accounts. Private wealth has led to public risk and the entire economy is now in recession as a result of irresponsible lending practices in the housing market.

"If the Fed hadn’t acted this morning and Bear did default on its obligations, then that could have triggered a very widespread panic and potentially a collapse of the financial system."
JAMES L. MELCHER, president of Balestra Capital, a hedge fund based in New York.

Now that the bubble has burst, the tune being sung by the banking industry is quite different from the traditional anti-regulation anthem of the Conservative hymnbook. So what happens? The Federal Reserve dips into the public purse to bail out Bear Stearns. Those Bear Stearns executives that approved and personally profited by the faulty lending programs will not bear any burden other than the requirement of spending a few boring evenings at GOP fundraisers or the White House, and cutting a few checks in campaign contributions equaling a mere fraction of their personal profits. Conservative Movement Ideology redux: Regulation is bad unless it is used to bail me out of a significant loss from my own bad judgment.

Another folly being played out in the Bush Administration is the interpretation of governmental purpose. George W. Bush ran for election on a platform that government is bad for business and bad for the “American people.” He keeps claiming to know what “the American people” want. Just who these “people” are that he refers to is still not entirely clear. However, one thing that we have seen clearly and consistently, as the size of the Federal government has grown steadily under his watch, is that for the Bush Administration, government as inventory is apparently not seen quite so negatively. The examples of Bush Administration treating government largesse as a commodity to be sold on the open market are in the multitudes and more are surfacing daily. The Secretary of Housing and Urban Development in the Bush Administration is under fire and pressure to resign after revelations of how he steered profitable government contracts on behalf of his personal cronies for projects in New Orleans [Katrina was not a “disaster,” it was an “opportunity”] and the Virgin Islands. Wolfowitz and the long list of Bush officials escorted out of office for self-dealing demonstrates the prevalent ideology and ethic of the Conservative Movement leaders chosen to manage the US government offices under Pres. Bush.

The transfer of billions of dollars in no-bid government contracts to Halliburton and its subsidiary KBR to provide nearly ¾ the entire supply of support services and material in Iraq is another example of the “government or public trust for sale.” Whatever one thinks about the engagement in the Iraq war, it is clear that the troops need to be adequately supplied and supported with food, clothing, medical supplies and other basic needs. Most of these things are not sophisticated goods that require any extraordinary expertise or that involve any proprietary trade secrets. These latter criteria are supposed to be the only times [other than extreme emergency based upon short term time constraints, a condition clearly not applicable on contracts running for years] that could justify not opening up such government contracts for public bid. Yet the Bush Administration has committed billions of dollars in public funds without competitive bidding to the company previously run by the Vice President, and continues to do so even after proof of multiple fraudulent billing incidents involving overcharges in the tens of millions of dollars. Conservative Movement Ideology redux: “Governmental power is bad, unless it can be sold or leveraged in the free market for personal gain or to steer large profits to one’s friends and associates for their personal gain at the expense of the public.”

Whether the public truly wants better government and what will be required to return to an ethic of true "public stewardship" and "public service" is a question that the electorate will have to face in the November elections. For the old maxim is still true: "The people will get as poor a government as they are willing to accept, and as good a government as they are willing to work for." The endemic corruption of the Conservative Movement will continue to provide extreme presure for the people to accept the worst and dissuade them from rising up to demand better.