Paul Krugman’s Great Unraveling

by Jacob Laksin - October 17th, 2008 - Front Page Magazine

With the election of President Bush, Krugman lost any sense of broader perspective and abandoned any pretense to considered analysis. His Times columns became bitter screeds against the Bush administration’s “hard right turn,” “America's radical right right-wing media,” and the right generally. “Yes, Virginia,” Krugman insisted, in all apparent seriousness, “there is a right-wing conspiracy.”

Krugman reveled in his new role as a scourge of the right. “If I have ended up more often than not writing pieces that attack the right wing, it's because the right wing now rules— and rules badly,” he declared.

Ironically, it is the right wing press that is too often in the tank for supposedly "conservative" policies that are anything but. I argue continuously that "Wall Street" is not the friend of capitalism or free enterprise that it should be.

The rational argument for capitalism is the results it provides during the period when it works. Products cost least and are of the highest quality when there is open and free competition to provide them for society. That significant advantage of capitalism has huge rewards for society in making the resulting overall community wealthy due to the hard work it entails to meet the needs of the people. It is the justification of efficiency that economists usually tout for capitalism. It creates wealth.

However there is a real recognition that capitalism can lead to a monopoly, or even an oligopoly situation that can legally pretend competition while in actuality accepting a static market, which exacts unfair profits from the people. Capitalism loses all its claims of being a superior system when either situation comes to pass. Any system of government that wants to provide the benefits of capitalism over time must end both illegally created monopolies as well as total dominance by superior competition. The government process should assure rules that protect the formation of competition against powerful monopolies and oligopolies.

In America we mostly ignore monopolies and oligopolies that have arisen legally. Noting that reality, Wall Street has long since abandoned its hypothetical function of arranging capital for new ventures to compete in the marketplace, and has dedicated itself to mergers and acquisitions to eliminate competition by the creation of legal monopolies and oligopolies.

We thus have come to tolerate two powerful forces in America against capitalism in America. Government socialism of the Barack Obama dominated Democrat Party variety ... and corporate socialism of the Karl Rove dominated Republican variety.

It is the people who believe in free enterprise, the small business people of American, the actual practitioners of capitalism, who have no party they can call their own any more. It is not just imperative that the Republican Party repudiate the wall street wing of corporate socialism; it is imperative that such repudiation be so overwhelmingly well known that the average voter stops thinking that Republicans embrace Wall Street at all.

There is no practical difference in its result on loss of freedom between the government socialism of Obama and the corporate socialism of Rove. They are both evil beyond imagining.

I wonder whether the rage at Republicans by Krugman started with frustration over the duplicitous result of corporate socialism that Republican leadership has provided. It is at least arguable that the government socialism advocated by Democrats is less deceitful.