Eleemosynary Capitalism

Those Anticipating a Return to Power Are Going to Find Out That They Are Merely Next in Line

Conservative New York Times columnist Ross Douthat believes President Obama’s recent Oval Office address regarding the Gulf of Mexico oil spill was a tipping point or catalyst in which U.S. liberals begin turning against him. “Many liberals look at this White House and see a Presidency adrift,” he postulates.

His liberal colleague, Frank Rich, seems to provide confirmation. Rich urges Obama to act more proactively and forcefully than he had done to date in reaction to the spill. “It’s not just the future of the Gulf Coast, energy policy, or his Presidency that’s in jeopardy. What’s also being tarred daily by the gushing oil is the very notion that government can accomplish anything.”

“Liberals had hoped that Obama’s election marked the beginning of a long progressive era,” Douthat explains. Now they are panicking, fearful their dominance may last a mere two years before Americans opt for conservative reactionary retrenchment. Their growing contempt for Obama, Douthat continues, draws it source not from any demonstrated incompetence on his part but their fear that “liberalism itself may be running out of time.”

All this leaves many on the right celebrating gleefully. Conservatives understood George W. Bush “blew it” in his second term and they feared an extended period of power for Democrats as well. They believed a Democratic fall was inevitable but cannot believe their luck that the tide is turning so quickly.

Many conservatives, the smart ones at least, are not so naïve as to believe their return to power will cool the anger pervading this country. However, they also believe they will succeed where Obama and the Democrats have failed because unproven extremist theories drive the latter, whereas they operate on sound, common sense conservative principles.

They may well be correct that, rightly or wrongly, a majority of Americans now see liberal Democrats as too extreme to be comfortable leaving them in charge. However, this intolerance with extremism may doom them just as much as the public’s impatience for results. Nothing is hurting Obama more than a lack of public confidence in government but anti-government conservatives are in for a shock by how little confidence this same public has in their own panacea to all problems – free market capitalism.

This is not an essay on the death of capitalism, which is alive and well both in this country and throughout the world. Nor is it an attempt to argue that government control is a superior solution to free markets. Rather, it is an observation that capitalism’s luster has dimmed considerably for most Americans in recent years. Obama’s failure to turn his progressive vision into government success stories may have leveled the playing field between government and capitalism but it has not returned capitalism to its former unassailable reputation.

In the past, conservatives’ best and frequently employed argument against what they saw as the insidious forces of creeping socialism was to roll their eyes and observe that private enterprise, even at its worst, is always more effective and efficient at running anything than government. It became cliché because people accepted it as obvious. Nowadays, such claims carry far less credibility. Voters – from Tea Partiers to Independents – may be angry but they are not stupid.

Agree or disagree with Obama’s stimulus, Americans understand that greed and corruption by loosely regulated private financial institutions led to the need to pull back an economy perceived as on the brink. Regardless of Obamacare’s popularity, most Americans still want some type of healthcare reform precisely because private caregivers and insurers made such a mess of the current system. Even if the Obama Administration reacted too slowly or insufficiently, Americans place the bulk of the blame for the Gulf spill on BP and an all-too-cozy relationship between Big Oil and federal inspectors.

The loss of faith in capitalism as the solution arises from the same source that conservatives blame for loss of faith in government – the rise of extremism within each. This extremism has resulted in what I am going to call “liberal capitalism.” By this, I do not mean some variation on Bush’s “compassionate conservatism.” It does not refer to capitalism that welcomes regulation or seeks to promote social welfare. Instead, I refer to the other meaning of “liberal” – overly generous, unconstrained, unrestricted, even licentious.

For much of this nation’s history, we practiced a conservative form of capitalism. Companies created good and services that brought demonstrable values to consumers; investors demanded nothing less before placing their money at risk. Growth occurred slowly and carefully over time; wealth acquisition was protracted but sustained. Reward followed from hard work and more than a little bit of luck.

Industrialization and technology brought about mass production, allowing entrepreneurs to gain massive wealth based on the labor of thousands. These players used part of their wealth to dominate the free market and avoid its natural competitive restrictions. The economy adjusted by allowing government to regulate business when it would not police itself and/or free market forces proved insufficient.

However, after the economic recession and malaise of the 1970s, conservatives advanced a new theory under Ronald Reagan. They insisted limitations on unrestrained greed were not common sense conservatism but radical socialist impediments holding down wealth creation. Democratic government was no longer the partner of capitalism but its most bitter enemy. The economic upturn of the 1980s and boom of the 1990s solidified this belief in the minds of many in a manner the shaky economy experienced since 2000 could not dilute.

Financial analysts no longer judged companies by the value of their products or the solidity of their assets but solely by their quarterly bottom lines. Investors forsook creation of sustained wealth for quick profits. Financial gurus promised that wealth could be created by wealth itself and the whole system could continue growing at ever-increasing rates forever. Risk was virtually non-existent. It was liberalism run wild.

The whole thing was a pipe dream, of course. The bursting of the high tech bubble threatened the dream but business executives found ways to cook their books and government responded by ordering regulators to look away as well as offering bailouts, tax breaks, subsidies, and other forms of corporate welfare. The housing bubble was even larger and its bursting threatened the entire economy. The stimulus offered by government in response, while necessary, angered Americans not only for its size but because it basic approach was all too familiar and frustrating.

Ultimately, capitalism is an attempt to manage limited resources. While fossil fuels are a topical prime example, the fact is that all resources are finite and, thus, so is the wealth they generate. Liberal capitalism has failed to acknowledge this difficult Truth. As a result, it has increasingly morphed into eleemosynary capitalism, requiring the charity of government and much of society to continue filling the pockets of a dwindling privileged few.

The almost unbelievable comments of politicians like Rand Paul and Representative Joe Barton of Texas, defending BP over the Gulf oil spill and criticizing the Obama Administration for attempting to hold the company accountable, reflects how squarely the Republican Party endorses government’s role as chief apologist for capitalism’s excesses. The vast majority of those angry today will discover that placing the GOP back in charge will fail to lower their blood pressures or increase the long-term worth of their portfolios.

Moreover, those who have sold their souls to liberal/ eleemosynary capitalism – sincerely but mistakenly believing it to be the only true form of capitalism – are going to discover that if time is running out for liberalism, they are next in line. Their return to power will last only as long as the vast but still finite wealth and resources of their benefactors holds out.