Weekend Economists Examine the Root of All Evil: February 28-March 2, 2014

[Demeter]

6. Gaius Publius: Are Democrats who Propose Cuts to Social Security “Stupid” or Just Doing Risk-Analys

http://www.nakedcapitalism.com/2014/02/gaius-publius-democrats-propose-cuts-social-security-stupid-just-risk-analysis.html

...Back before FDR, “free-marketism” and “liberalism” (now called “classic liberalism”) were the same thing — “liberation” of markets from government interference. That’s hard to imagine, but it’s true. For more than a century prior to FDR, “liberalism” and “free market ideology” were identical. This goes way back, deep into the 1700s. (I wrote about that here: http://americablog.com/2013/12/progressive-liberalism-doesnt-carry-critique-capitalism-progressivism.html )

FDR re-introduced a needed role for government regulation of markets in order to stave off what could have been popular revolt during the Depression. That semi-anathema offshoot of classic liberalism came to be called simply “liberalism” in the U.S., but in fact it was “social liberalism,” a variant, a side path (now called “socialism” in Europe). Because pre-FDR liberalism had as its gospel, zero interference from government in markets, the Democrats’ pro-government heresy had the effect of moving most of the free-marketeers into the Republican party, and at the same time, taking away their former name (“liberal”). Things stayed this way until the 1970s.

Fast forward to the beginning of the effort to kill the FDR revolution, the Carter years and after. Troglodyte (knuckle-dragging, John Birch Society) free-market billionaires stayed in the Republican Party, their natural cultural home. But because of the increased interest in “deregulation” by Carter and the Democrats, the more open-minded of the moneyed class (those who hated gays less, for example, or believed in some civil rights) returned to the Democratic Party as “neo-liberals” — which actually means its opposite. They were “new liberals” only from an FDR point of view. They were actually “old liberals,” classic free-market liberals from pre-Depression days. Al From and Bill Clinton fronted for them politically when they built the DLC, but it was a billionaire op all the way. (For a great exposé of this by Rick Perlstein, click and read here. The birth of the DLC and the rise of the neoliberal Democrats is a fascinating story.)

So now the free-market strain of billionaires, which is actually a “we want to control markets for our benefit” strain, is rampant in both parties. It’s a deep strain in the billionaire class, on all sides of the social spectrum, and as I say, it goes back before Jeremy Bentham...