What lies between communism and capitalism? And are any of the inhabitants of that much-fabled region stable equilibria? Unfortunately, the best candidate might be crony capitalism. China has moved from communism to crony capitalism, as Richard Fernandez reports, and Obama seems committed to pushing the United States from capitalism to the government-dominated economy characteristic of crony capitalism. So much the worse for all of us. If crony capitalism were a good economic system, Latin America would be a paradise. It does, however, appear to be highly stable. Once a country has fallen into its grip, it’s not clear how it can ever escape from it. The government becomes too powerful to resist, and the most powerful private actors have incentives to maintain the system.
But the American economic landscape is about to change beyond recognition. Another article at the Times Online describes what Barack Obama has in store.
The scale of Obama’s ambition has only just begun to sink in. If his budget for 2010 passes through Congress largely unscathed, it will represent the “the biggest redistribution of income from the wealthy to the middle class and poor this nation has seen in more than 40 years”, said Robert Reich, a former secretary of labour under Bill Clinton who has been advising Obama.
Reich told The Sunday Times: “It is the boldest budget we have seen since the Reagan administration, and drives a nail in the coffin of Reaganomics. We can basically say goodbye to the philosophy espoused by Ronald Reagan and Margaret Thatcher.”
It is apparently an article of faith among certain members of the administration that America’s economy needs to be overhauled. Yet other economies with greater government involvement are faring poorly in this global crisis and may fare far worse than the United States. What is the evidence for the assumption that more government is better for the economy besides the bald assertion that it is so? What happened to the idea that government intervention is permissible only there is a compelling public interest to impose it — rather than making it the default condition? But indiscriminate government involvement brings with it not only economic dangers, it brings political peril implicit in the threat of cronyism. Once bureaucratic authority over economic activity transforms itself from a necessary evil to a condition to be desired, a fundamental political transformation will have taken place.
At least, as Paul Mirengoff observes, we now know who Obama is. Sadly, he’s exactly who I thought he was, and who every astute observer should have seen him to be–a radical who seeks nothing less than the transformation of the United States from a nation founded on inalienable rights to life, liberty, and property to one in which the Sovereign owns all and allocates “rights” moment to moment as it sees fit.
When the Berlin Wall fell in 1989, I knew that the victory over communism would have to be guarded as future generations might threaten to repeat its mistakes. I did not imagine that we would be repeating them just twenty years later.