Rolling Back the Twentieth Century Watch: Abolish the FDIC

Rortybomb, like most of blue America, originated in red America and maintains ties there that give him an occasional finger on the pulse. He reports on how many fathoms the fever swamp (Konczal, Mike, “Things I’m Reading, 12/22,” Rortybomb, 22 December 2009):

Visiting home for the holidays, it’s amazing to me how certain groups of friends, who I mostly considered in the generic Republicans/conservatives camp, have been wading deeper into the Ron Paul territory. “Abolish the Fed” is one thing, but what surprised me the most was when I was at a Christmas party several people mentioned, fairly out of nowhere, how bad FDIC is for the economy. I think they thought that regular depositors could have done a better job vetting financial institutions than major sophisticated shareholders. When I tried to point out how if there wasn’t FDIC and millions of savings accounts were getting wiped out in ordinary bank runs we’d almost certainly have a wave of turn-of-the-last-century style violence that is hard for us to even imagine now — think bomb throwing anarchist violence — they seemed to be ok with that.

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The Hegemony of Neoliberalism

A roundup of some recent thinking on the hegemony of neoliberalism:

  1. Taking off from what Matthew Yglesias calls “Prestige Cross-Pollination1 and Ezra Klein “The Tyranny of the Economists,”2 Mike Konczal at RortyBomb relates of the,

    … “credibility gap” between sociologists and economists, even when they deploy the same methods, when it comes to the public debate over the issues we face.3

    It helps to have a paradigm, and in recent years economics has rather forcefully acquired one.4

  2. In his review of Steven Teles’s new book, The Rise of the Conservative Legal Movement,5 Henry Farrell makes a brief assessment of the state of the tyranny of the bureaucracy:

    If you win the technocrats (and [the law and economics movement] arguably has won the technocrats), then you very nearly have won the entire game.6

    This strikes me as about true. The shift rightward of the economics and policy intelligentsia since the New Frontier / Great Society heyday of Keynesian fine tuning has played a significant part in the general right-ward drift of the polity. There aren’t exactly dais upon dais of unreconstructed Keynesians offering policy makers intellectual cover on the Sunday morning shows.

  3. Via Charles Mudede7, Steven Shaviro reacts to Peter Ward’s new book, The Medea Hypothesis: Is Life on Earth Ultimately Self-Destructive?8 Using the purported instability of ecological systems — one of the paradigm cases of self-organization — Mr. Shaviro sets himself against emergence, evolution, complexity, network theory, et al. He identifies Friedrich Hayek as one of the key thinkers of self-organization — the market would be one of the other paradigm cases —

    But the most significant and influential thinker of self-organisation in the past century was undoubtedly Friedrich Hayek, the intellectual progenitor of neoliberalism. … inspired by both cybernetics and biology, Hayek claimed that the “free market” was an ideal mechanism for coordinating all the disparate bits of knowledge that existed dispersed throughout society, and negotiating it towards an optimal outcome. Self-organization, operating impersonally and beyond the ken of any particular human agent, could accomplish what no degree of planning or willful human rationality ever could.9

    Friedrich Hayek, cyberneticist.

Combine these three and where are we for policy making and policy debate?

  1. Yglesias, Matthew, “Prestige Cross-PollinationThink Progress, 2 June 2009
  2. Klein, Ezra, “The Tyranny of the Economists,” The Washington Post, 2 June 2009
  3. Konczal, Mike, “Economists, Methods and Government,” RortyBomb, 3 June 2009
  4. The Future of Economics is Here: The Arational and the Irrational,” This is Not a Dinner Party, 28 September 2008
  5. Teles, Steven, The Rise of the Conservative Legal Movement: The Battle for Control of the Law (Princeton, NJ: Princeton University Press, 2008)
  6. Farrell, Henry, “Fabians and Gramscians in Law and Economics,” Crooked Timber, 30 April 2009
  7. Mudede, Charles, “Self-Made,” SLOG, The Stranger, 28 May 2009
  8. The Medea Hypothesis: Is Life on Earth Ultimately Self-Destructive? (Princeton, NJ: Princeton University Press, 2009)
  9. Shaviro, Steven, “Against Self-Organization,” The Pinocchio Theory, 26 May 2009