"What happened to the ideology? On closer inspection, it turned out to be something of a cover all along."

Robert Reich also has a pretty good idea of our Political Culture:

"Greenspan’s real failure of imagination was his inability to believe there are useful market rules beyond those that protect private property and prevent outright fraud. This, presumably, was why he kept insisting for so long that government be held at bay( WHO KNOWS WHAT HE REALLY BELIEVES? ).

But now the United States has chosen to deal with the financial crisis by buying up a significant fraction of the shares of the nation’s major banks and its largest insurance company, underwriting the loans of a large portion of the nation’s home-lending industry, and is on the verge of underwriting the nation’s largest automobile makers. Yet little if any of this largesse has found its way to the broader public( A VERY BIG SOCIAL PROBLEM WITH THE BAILOUTS ) – to homeowners in danger of defaulting on their mortgages and losing their homes, small businesses close to insolvency, state and local governments cutting public services because of budget shortfalls, families unable to afford health insurance, or young people unable to obtain loans to finance university tuition. ( TREASURY AND THE FED ARE TRYING NOW )

The ideology of a perfectly self-correctly free market( THEY DO NOT BELIEVE IN THAT AT ALL ) has given way to what might be described as a raid by America’s biggest banks and corporations on the public purse, supposedly justified( ACTUALLY JUSTIFIED AS NECESSARY TO THE FUNCTIONING OF OUR SYSTEM, AND CONSIDERED A FORM OF FDIC INSURANCE THAT ONLY A FEW PEOPLE SEEM TO BE AWARE OF ) by benefits to the broader public which seem never to materialize( THE INVESTMENT CLASS IS THE BROADER PUBLIC IN THEIR VIEW ). What happened to the ideology?( THE ONE ABOUT GOVERNMENT GUARANTEEING TO HELP THEM IN A CRISIS? IT'S WORKING OUT JUST AS PLANNED. SURELY YOU KNOW THAT? ) On closer inspection, it turned out to be something of a cover all along( THAT'S IT ).

During the same years Greenspan called for deregulation of financial markets( ONLY THESE ), Wall Street was accelerating its bankrolling of the U.S. Congress( THAT'S THE FDIC INSURANCE I WAS REFERRING TO ). Securities and investment firms contributed larger and larger amounts of money – not just to conservative Republicans who might expect such support but also to Democrats who had never been so graced before( OF COURSE. THAT'S OUR SYSTEM ). According to Center for Responsive Politics, Wall Street firms dramatically increased their contributions to both parties during these years. Their share of total donations to the Democratic Senatorial Campaign Committee, for example, rose continuously, from 5 percent during the 1999-2000 election cycle to 15 percent by the 2007-2008 cycle.

The money was accompanied, and often raised, by Wall Street lobbyists who pushed Congress in the same direction Greenspan urged – blocking regulation of derivatives, weakening oversight of subprime mortgage lending, and preventing the Securities and Exchange Commission from doing its job. ( IN OTHER WORDS, GETTING GOVERNMENT OFF THEIR BACKS WHEN IT SUITED THEM )

To take but one example, the collapses of Enron, WorldCom, and several other giant corporations in 2002 revealed a troubling pattern of credit-rating agencies repeatedly assuring investors that such companies were good investments until just before they went under. When the Securities and Exchange Commission asked Congress for additional authority to oversee the credit-rating agencies, Wall Street and its lobbyists blocked the measure( IT WAS CLEAR WHY BACK IN THE S & L CRISIS ). With hindsight, it’s clear why. Wall Street investment banks were paying the agencies to rate various mortgage backed securities after first advising the firms that issued them – and collecting fees – on how to package them to get high ratings. Years later many of these same securities, based on risky loans, would prove to be worthless, threatening financial institutions worldwide. ( ALL TRUE )

Apparently Greenspan hasn't learned anything from all this( HE'S NOT SURPRISED. COME ON. ), but the rest of us have no excuse. The real choice ahead is between democratic capitalism and authoritarian capitalism( MELODRAMATIC ) . China is perfecting the latter. But unless we are careful we – the citizens of democratic capitalist nations – will discover that our form of capitalism has become more authoritarian( WE HAVEN'T YET? OH MY. ) than democratic. The current economic crisis surely poses a test for capitalism( A SOCIAL TEST. READ BURKE ). But it is also a test of democracy( AN ECONOMIC TEST. READ HAYEK )."

Our system is a Welfare State in which various Interest Groups compete to get the government's aid and largess. Almost everyone wants government intervention. All they differ in is the details of what they want the government to do. However, De-Regulation is not an end in itself, but a system in which the Government gives certain businesses more leeway while continuing to explicitly and implicitly guarantee government help in a financial crisis. What was not anticipated was the size of the crisis and ineffectiveness of the government's response.

I don't know exactly what Democratic Capitalism means to Reich. We have it. What we've had for the last eight years is just a peculiarly obnoxious form of it. It's up to the New Administration and Congress to do a better job of governing. It's hard right now how to see it being worse.

I suppose that my biggest difference with Reich is that I believe less government would alleviate some of these problems. However, that will not be possible without a growing and prosperous Middle Class, which I do not believe that we have now. I base that belief on using my eyes to see the obvious, which must be much harder to do than it seems.