"Roughly 94 percent of the people in capitalist America make their living from wage or salary. Only 6 percent are true capitalists in the sense of deriving income from ownership of the means of production...We can win the argument once and for all by simply making more of our people Capitalists."
--Ronald Reagan
As the world's financial markets descend further into economic crisis, there are a lot of fingers pointing the blame at one another, and a lot of complicated talk from both sides trying to assign the blame. McCain and "That One" were at the long-winded blame game again in last night's debate. Conservatives like to talk lie about the CRA, supposed Democratic ties to Fannie Mae and Freddie Mac, and the supposed evils of lending to minorities. Democrats like to talk about deregulation, the Gramm-Leach-Bliley Act repealing Glass-Steagal, and corrupt CEOs with golden parachutes and fancy junkets.
When all is said and done, Democrats come out of the complicated arguments as more trustworthy--in part because Democrats are more trusted on the economy to begin with, and in part because our arguments are actually true.
But there's no need to get that complicated. The crisis we're in now is actually pretty simple to explain. This crisis can be laid directly at the feet of conservative ideology going back at least to Ronald Reagan (and really, to the robber barons of the pre-1930s, but no need to complicate things here). It is the fault of an ideology of hypercapitalism run amok, and a belief in the idea that wage-earners are semi-traitorous dolts too stupid to have figured out how capitalism really works. Allow me to repeat the Reagan quote:
"Roughly 94 percent of the people in capitalist America make their living from wage or salary. Only 6 percent are true capitalists in the sense of deriving income from ownership of the means of production...We can win the argument once and for all by simply making more of our people Capitalists."
--Ronald Reagan
That's all you need to know. Hyperconservatives looked at America and, in the words of Sarah Palin, "didn't see America the way you and I see America."
They saw a nation of semi-socialist wage-earners who weren't doing their part to be true capitalists, and who were therefore at risk of being tempted by "socialist" ideology. And they set about to change that by making everyone part of the "Ownership Society." It was a deliberate strategy by hyperconservative neoliberal ideologues to win votes while making themselves rich at the same time.
Republican Presidents put a number of schemes in place to make that happen. Guaranteed pensions were converted to stock-based 401(K)s. Banks were deregulated and allowed to lend to at-risk borrowers so that they would presumably see themselves as "capitalist owners" and be likelier to vote Republican. As I said in a pre-meltdown post Why the Repubs Think the Economy is Great:
Perhaps most tellingly, the GOP-led push to get as many people into the "ownership society" as possible led to huge asset bubbles in housing and other sectors, driving up prices beyond the range of normal affordability and pushing people into investment situations they could not maintain. This was done as a deliberate strategy: Karl Rove and his minions believed that the more people were "invested" in housing and stocks, the more Republican they would become. As Naomi Klein points out in The Shock Doctrine, it had worked for Margaret Thatcher in Britain, and there was no reason to believe it shouldn't work here. As one wealthy Republican told me at a Washington, D.C. luncheon at a big pro-free-trade conference:
We need to get more people invested in the stock market. If everyone owns a piece of Halliburton, nobody will be complaining about them anymore because they'll all say, "hey, I own part of that. Leave it alone!"
It was a deliberate strategy to gain votes, and it backfired horribly. Not enough people got into the ownership society; many who got in were just as unceremoniously kicked out when their ARM mortgage started to adjust; and the rest of America continued to struggle more and more, working longer and longer hours to service higher and higher mountains of personal debt.
The fact is that Republicans have a love/hate relationship with people who actually work for a living, rather than live fat off the proceeds of "ownership." On the one hand, wage-earners make their fat proceeds possible; on the other hand, wage-earners tend to realize, sooner or later, that they're getting screwed by the system. With the advent of globalization, however, Republicans started to realize that most of the actual wage-earners could be found cheaper off-shore in countries with lower standards of living. In the meantime, the more people invested in stocks and housing, the more Republican they presumably became, and the richer the fat cats with all their money invested in the markets became as well.
Putting the entire nation's collective assets into the stock and housing markets was a win-win situation for Republicans politically and economically. Until it all predictably crashed, that is. But conservatives, like the unfettered free market they idolize, have never been known for their farsightedness.
The cause of the crisis is simple: a Republican ideology that treats workaday wage-earners as scum too stupid, lazy, or socialist to actually become "True Capitalists." An ideology that predated Reagan's presidency in Reagan's own writings. An ideology whose heart must be driven through with a stake if America is to have any hope of surviving this crisis stronger than it was before.