Thomas Frank’s WSJ swan song:
The Economic Crisis: Lessons Unlearned
This is my last weekly column for the Wall Street Journal, and writing it has naturally put me in mind of my first efforts in this space, back in the summer of 2008.
Those were the days when economic disaster was beginning to unfold; it hit a crescendo in September of that year when Wall Street teetered and the government came to the rescue with a TARP.
By November, the nation’s mood had soured enough that a senator from Illinois won the presidency even though he appeared to defy political convention in countless ways. And all the while, the front pages overflowed with shocking tales of the corruption of the old order, the gross venality of the subprime lenders, the sabotage of the regulators, and the manufacture of poisonous triple-A securities.
It was an awful time, but for someone in my situation there was also—please pardon the expression—hope to go along with the disaster. We were descending further into the worst recession I had ever seen, but at least we were finally going to be done with the farcical intellectual and political consensus of the preceding decades.
Never again, I thought, would journalists fall over one another to flatter CEOs, nor would pundits build careers by finding clever ways to equate the workings of markets to democracy itself. Management theorists would cease to be public intellectuals, and the political advice of stock pickers would henceforth be treated like the toxic sewage it clearly was.
“The market god has failed,” I wrote in this space in February 2009, and I thought its flop augured not only a massive reconfiguring of the relationship between investment banks and the rest of society but a complete overturning of the comfortable assumptions of the pundit class.
At first, there were reasons to believe such a thing might come to pass. Alan Greenspan’s famous October, 2008, confession of “shocked disbelief” at the lenders’ lapses sounded like a turning point to me, and it felt equally momentous when Richard Posner, a famous proponent of the Chicago school of economics, allowed that deregulation had gone “too far.”
But those were intellectuals, bound by a different code than politicians and pundits. Elsewhere, things scarcely changed at all. Yes, that new president and his partisans in Congress managed to pass an enormous health-care bill, but only after making sure that the big institutional players were on board and that the new law followed a business-friendly prototype. Then, a halfhearted stab at re-regulating Wall Street, and the audacity tank was just about dry.
As the right howled “socialism,” President Obama took pains to demonstrate his loyalty to the exhausted free-market faith. On trade issues and matters of economic staffing, he loudly signalled continuity with the discredited past. On the all-important issue of regulatory misbehavior—a natural for good-government types—he has done virtually nothing.
The real audacity has all been on the other side. Many Republicans chose to respond to the crisis not by renouncing the consensus faith of the last 30 years but by doubling down on it, calling for more deregulation, more war on government.
That they have partially succeeded with such a strategy in these years of financial crisis, mine disasters, and oil spills is testimony to their political brilliance—and to Democratic dysfunction. As is the burgeoning populist movement that now stands beside the GOP, transforming anger over unemployment into anger over the auto bailout and the good pensions enjoyed by public workers.
Where I most expected changes, though, was in the world of professional punditry, which had largely failed to raise questions about the disaster as it loomed. Today it’s two years on, and nobody has changed the water in the fish tank, as a friend of mine likes to say. Thomas Friedman of the New York Times still burbles about theories of creativity that were management clichés 10 years ago. The Washington Post prosecutes its undeclared war on Social Security by having former TARP czar Neel Kashkari explain why banks had to be bailed out but “entitlements must be cut.” The need to balance the federal budget is almost universally thought to be urgent. And bipartisanship still intoxicates the pundit mind with its awesome majesty.
On Wall Street, the road to hell is still lined with bonuses. And Washington feels the same as ever. The prosperous, well-educated people still tote their yoga mats around town, line up outside the special cupcake shops, and listen to NPR talk show hosts welcome the next generation of boring centrists into the glorious circle of the right-thinking. The lobbyists still gather at the tasteful restaurants du jour, doing their work on behalf of the forgotten men of the uppermost one percent.
As for me, it’s two cans of beer and the escape chute to terra firma. Goodbye and good luck.