An attack on “crony capitalism” David Stockman, Reagan’s former budget director, published in the the March 31st New York Times has come in for major attack from both the right and left. Given the piece provides a fairly accurate analysis of America’s current economic woes, I find this quite sad.

Stockman also attacks  crony capitalism (i.e. government corrupted by corporate interests) in his latest book The Great Deformation: The Corruption of Capitalism in America.

I find  it a little astonishing to see a so-called conservative come up with so many progressive-sounding solutions for America’s economic mess. For example: 1) 100% public financing of elections 2) Restricting the duration of campaigns (like they do in New Zealand). 3) Prohibiting lobbying, for life, by anyone who has been on a legislative or executive payroll. 4) Overturning Citizens United. 5) Ending the corrosive financialization that has turned Wall Street into a giant casino since the 1970s. 6) Eliminating access by Wall Street Banks to cheap Federal Reserve loans 7) Banning banks from trading, underwriting and money management in all its forms [I wonder if this means he supports the IMF proposal to end the ability of private banks to create money in the form of loans?] 8) Reigning in the Federal Reserve by ending their ability to buy government debt and micromanage the economic [some of us would go all the way and abolish it].

Here’s an excerpt from the end of the oped:

“All this would require drastic deflation of the realm of politics and the abolition of incumbency itself, because the machinery of the state and the machinery of re-election have become conterminous. Prying them apart would entail sweeping constitutional surgery: amendments to give the president and members of Congress a single six-year term, with no re-election; providing 100 percent public financing for candidates; strictly limiting the duration of campaigns (say, to eight weeks); and prohibiting, for life, lobbying by anyone who has been on a legislative or executive payroll. It would also require overturning Citizens United and mandating that Congress pass a balanced budget, or face an automatic sequester of spending.

It would also require purging the corrosive financialization that has turned the economy into a giant casino since the 1970s. This would mean putting the great Wall Street banks out in the cold to compete as at-risk free enterprises, without access to cheap Fed loans or deposit insurance. Banks would be able to take deposits and make commercial loans, but be banned from trading, underwriting and money management in all its forms.

It would require, finally, benching the Fed’s central planners, and restoring the central bank’s original mission: to provide liquidity in times of crisis but never to buy government debt or try to micromanage the economy. Getting the Fed out of the financial markets is the only way to put free markets and genuine wealth creation back into capitalism.”

I guess America’s stubborn economic difficulties have at least one silver lining. In the mad scramble to identify workable solutions, conventional notions of right, left and progressive are rapidly breaking down. I have always found such labels arbitrary, artificial and too easily hijacked by the two major parties - who can’t see beyond the banks and corporations who are funding their next campaign.


photo credit: The Aspen Institute via photopin cc