Bailout Questions from Kansas (Populist Alternatives, Socialist Realities, and Progressive Compromises)
This past Friday, I appeared on Kansas Week to discuss, among other things, the bailout bill which had finally passed the House of Representatives and been signed by the president just a few hours earlier. I can't imagine the readership of this blog and the viewing population of Kansas Week overlaps at all (except maybe for you, Caleb!), but in case there is someone out there who saw me on KPTS, and is a little confused about what I said there on the one hand, and what I said here and here on the other, let me see if I can elaborate just a bit more.
(I've sent a version of this post to the Wichita Eagle; we'll see if they ever run it. [Update: here it is.])
My main point during the discussion was that the remarkable amount of uniformity in the Kansas Congressional delegation's "no" votes (Senators Brownback and Roberts both voted no, in a vote that ended last week 74-25 in favor of the bailout package, and Representatives Boyda, Moran and Tiahrt--three out of Kansas's four representatives in the House--voted no not just once, but twice) needn't be shocking; it just needed to be explained. This was a huge vote, in political terms; the president, both major presidential candidates, and the Democratic and Republican leadership in the House and Senate all pushed for it. To go against that kind of pressure suggests either seriously political calculations, or serious convictions, or both. It would be nice, especially as four of these five people come back to Kansas to campaign for re-election, to be able to get them to elaborate upon what their votes meant. I think I got that point across, however briefly. But along the way, there were a couple of things said that needed more context. One was an unfair comment about some politicians engaging in "populist pandering"; another was my final observation that I would have liked the bailout plan a lot more if there had been more "honesty" about what it involved. Let me see if I can situate both comments a little better.
We all know that the debate over this bill was a contentious one. In the end, as is usually the case in our democracy, impassioned words and party directives were not enough, and the votes for this complicated, unpopular, and very expensive proposal had to be bought, with the final bill being sweetened with over $100 billion worth of tax benefits, federal guarantees, and outright pork, all to win over enough Republican and Democrat representatives for it to pass. (By which time, incidentally, it had expanded to an 460-page monster). And even still, five out of Kansas's six federal politicians said no. Why?
Was it simple political calculation? In the Senate in particular, that explanation is pretty believable. The U.S. Senate is, by design, a fairly elite body, and there was never much doubt that the majority of U.S. senators would be moved by elite financial considerations–crumbling credit markets, stock portfolios and retirement plans losing value, access to business loans drying up, etc. Running angrily against Wall Street’s "greed" always good politics, even if there’s no substantive populism or suggestions of reform laying behind one’s criticisms, and so it’s not surprising that Pat Roberts–who, on the basis of his record, doesn’t have a single economically populist bone in his body–took a look at where the votes stood amongst his colleagues, and figured that he could afford to rail against the bill for the benefit of Kansas voters, confident that it would still pass. The same kind of calculation could explain the second votes of Boyda, Moran, and Tiahrt; they could see that enough of their colleagues had changed their minds so as to make certain that a bill which most of the Republican and Democratic establishments were firmly behind, and so they could afford to vote to show off their anger for the folks back home. (And lets not forget the presence of your usual interest group quid pro quos: in both the Senate and the House, the Congresspeople who had received the most campaign support from the financial sector were the most likely to support the bill. You stratch my back, I'll stratch yours, etc.)
But perhaps all that is too cynical. After all, how to explain our representatives’ first votes? How to explain the vote of Senator Brownback, who isn’t up for re-election this year? Brownback, in contrast to Roberts, actually does occasionally make Huckabee-style populist-type arguments, and so perhaps his no vote was more principled; might the same be said for Boyda, Moran, and Tiahrt?
I don't want to pick out or particularly criticize this reaction; far from it. I am a populist--at least, of a sort--and I respect populist arguments. The problem is that so often populism is treated cheaply as a style, without any real thought of the costly (and, yes, often comprehensive) reforms that would be necessary to make a populist economics and politics substantively worth pursuing. And so, when I hear attacks on Wall Street, I want to ask: is the populist anger at and defiance of Wall Street which, perhaps, Boyda and Moran and Tiahrt showed, directed at contemporary financial capitalism itself? Do they have something substantive to say about today’s economic world, so heavily dependent upon credit, debt, consumption, investments, and constant expansion? Will they follow up their populist attack on this admittedly astonishing and desperate power and money grab by the federal government, with an attack on those citizens–the rich, surely, but also the middle-class–who have allowed economic sovereignty to slip through their fingers, leveraging themselves for the sake of ever bigger homes, ever nicer cars, ever more profitable investment and retirement plans, ever more expensive universities for their children? In other words, would they be willing to explain their no votes as an expression for contempt not only for the financiers as the top who sent Wall Street’s banks reeling, but also for those average citizens who put the tools for doing so into those financiers’ hands?
A couple of weeks ago, Rod Dreher kindly linked to this old paper of mine, which was one of my several attempts over the years to put populist thinking to work in addressing the practical social and economic problems which farmers and those who depend upon them--which means, of course, all of us--face in America today. Rod is a fan of the populist alternative, but he also recognizes that pursuing real social and economic sovereignty is going to require supportive communitarian values to sustain it, and he, perhaps rightly, that "our culture is too fractured to form any stable populist political coalition," adding that: "Are you really going to get people who are pro-life and pro-choice, who are for affirmative action and against affirmative action, who are for gay marriage and against gay marriage, to put all that aside and unite around a populist economic agenda?" He makes a good argument, an argument which, in terms of this blog at least, goes a long way back: all the way back to when, in the wake of the 2004 elections, I was talking in this post (and this one too) about how the only way a genuinely liberal egalitarian politics (which I've since come to believe necessitates a significant populist component) was going to survive was if we could create--or recover!--a left which could contribute to, and become more supportive of, the "conservation" of a common culture, including a religious one. Perhaps Rod's right that such is a lost cause; that any common culture America once had is irretrievable, leaving us with just the "Benedictine option" as our only alternative. I hope not, if only because, as much as I have learned from McIntyre and all the various types of "Benedictines" who are following the path he gestured towards, in the end I fear too many people--too many poor people, too many unpopular or marginal people--would be left behind if we all dissolved into such routes. But anyway, in the meantime I nonetheless keep an ear out for populist rhetoric...and when I suspect it's being used, I want the people using it to treat it with some respect, not just as cheap vote-earning ploy.
Back to the bailout questions. All this aside, perhaps there was nothing populist about all these no votes whatsoever: perhaps, instead, they were expressions of libertarian conviction that, in a free market, banks that take risks with their assets must be allowed to fail. Well, you know how I feel about libertarianism, especially in the context of the farming Kansas voters depend upon and ritually praise. Still, I would love nonetheless to hear expressions of such conviction from our representatives’ lips. I think it would take remarkable political bravery for politicians running for re-election to look in the eye small business owners, farmers, students, and all others who depend upon solvent banks and flowing credit lines to pay their bills, cover their inventory, and handle their costs, and tell them that if they took a risk--and that includes putting their financial needs and decisions into others’ hands--then they need to be able to deal with the consequences. I would really respect such an answer, knowing as it does that it would mean a rebuke to all the safety nets, both corporate as well as governmental, which the great majority of Americans have come to plan their lives around. I wouldn't expect politicians who gave such answers to have a very long career in office, but it would be good to hear such honesty while we could.
Of course, populist anger and libertarian conviction do not exhaust all possible answers our senators and representatives to give to us. One could have voted no because one wished to express discomfort with granting this kind of power and financial discretion to a thoroughly unpopular and discredited president, and preferred to wait (and let Wall Street wait) until a different administration was in power. Or, one could have voted no because one genuinely did not agree with the plan to empower the Treasury Secretary to attempt to jump start the credit market by driving up demand for the business of these banks through bidding and negotiating for their assets. (The lack of confidence in international and credit markets over the past couple of days suggests that, whatever else is true, the promise of the approved plan alone is no magic bullet to putting things back the way they were, assuming that is even possible.) Perhaps one voted no because one actually preferred a more honestly socialist response, in which the federal government nationalized these banks or their transactions, and thus made voters not just indirect beneficiaries of any money that might be recouped though the recovery of Wall Street banks, but actual owners of the assets in question themselves. (This is the approach Sweden took during a similar banking crisis in that country fifteen years ago, and it seems to have worked well, though I doubt the Sweden social democratic model was on the mind of anyone who voted on this bill last week.)
Let's talk about Sweden for a moment, not just because I've brought it up already, and not just because a whole bunch of other bloggers are doing the same, but because it goes to the heart of what I meant about wishing our Congressional delegation could have been more "honest" about what they were voting on.
Some time ago, Patrick Deneen (who was on the same panel at which I presented the paper linked to above...small world!) posted a bit of a screed on his blog about "progressivism." His basic aim was to attack John Dewey and show the connection between his belief that, when properly educated, a people through democratic action can rise up and distinguish themselves from the "savages" back home in their primitive communities, and the tendency for elites today to freak out when a cultural "throwback" like Sarah Palin comes onto the scene. He makes a decent point (though Dewey is a complex figure; alongside his easy dismissal of any kind of traditionalism is a thoughtful understanding of how communitarian practices and goods need to undergird democracy)...but in any case, it is a limited point. Progressivism's cultural sins were, from my point of view (and Patrick's too) legion; that I don't deny. You can't be a reader of Christopher Lasch and not recognize that. But one of the problems with such a condemnation of the progressive movement in American history is that it fails to acknowledge the fact that so many of the "savages" that rose up within their communities--communities across the American South and Midwest, communities in Kansas too!--and called themselves "populists" (whether they actually joined the People's or Populist parties or not) found a home for themselves, a decade or two later, in progressive movements with the Democratic and Republican parties. William Jennings Bryan is the best example here, but he's not alone. Of course, such populists could be called--and historically were sometimes called--traitors to the cause (and worse), but the fact remains: when populist reforms ran aground, Progressivism pushed forward many of their same aims, and then some.
I'm thinking here about Camassia's comment on the aforementioned post, in which she asked some pointed questions about economic sovereignty and social democracy and localism: how much is too much? How can you tell good local control from bad? Sweden is a fascinating site for thinking about the balance between community and populism and local cultural authority, on the one hand, and the desire to generate and spread some wealth, on the other. The reason why it's fascinating is because it is a thoroughly modern capitalist nation-state, but it is also rather small. I noted that in my post, and Tyler Cowen picked up on it as well, turning it into a point of critique: in arguing against the Swedish approach to managing this kind of economic crisis--basically, nationalizing the banks and taking public ownership of the assets in questions directly--he observes that "Swedish governance is in many ways of higher quality than American governance. It involves lower transactions costs, more social unity, and it is more inclusive of many different interest groups....The Swedish banking system is also "small as a whole" compared to surrounding markets; you can't say that about the USA....[Moreover, the] U.S. doesn't have any tradition of successful nationalization....The diffuse and highly federalistic American political system is lacking in accountability and thus it is poorly suited for such policy actions." These are an important considerations: the kind of decisions we can make in the face of huge, costly, complicated economic crises, crises of a sort that so many unthinking and everyday modern liberal capitalist presumptions and activities--presumptions and activities that involve one's home, one's workplace, one's children--are implicated in it...well, said decisions are going to be, by definition, shaped by our size and our self-understanding and our history. Which, of course, isn't a socialist one. And so, as much as I think it's obviously that socialist solutions are the only one's available to those a modern state (and a modern state of being) that, in pursuit of greater justice and equality and comfort, has already exchanged one form of (negative) liberty for another (positive) sort--Daniel Larison, whom Ross Douthat is quoting in the above link, is a great thinker, but he doesn't often appreciate that "freedom from fear" is a real liberty too!--it nonetheless may be the case that neither the populist alternative, nor the socialist reality, is really practical. So what is left? Why, progressive compromises of course. (Senator Obama to the rescue? Perhaps, perhaps not. But as Noah Millman put it, there's only one party whose leadership appears to be fully serious about the compromises were faced with, and it's not McCain's.)
In any case, these are the sort of political thoughts and questions which we Kansas voters ought to be following up on, and which our no-voting politicians ought to be answering. Just because the bailout finally passed doesn't mean the debate should be over; the contrary, it's only beginning. In the meantime, it's Tuesday, and I'm going to watch the debate tonight. Will I see any of this, one way or another, on display in Tennessee tonight? I doubt it...but you never know.