(updated below - Update II)
In his New York Times column this morning, David Brooks announces that as a result of the financial crisis, "a new center and a new establishment is emerging" that will rule as a Benevolent Oligarchy over economic policy and will be comprised of Old Wise Men from Wall Street:
Once, there was a financial elite in this country. During the first two-thirds of the 20th century, middle-aged men with names like Mellon and McCloy led Wall Street firms, corporate boards and white-shoe law firms and occasionally emerged to serve in government.
Starting in the 1960s, that cohesive elite began to fall apart. Liberal interest groups took control of Democratic economic policy. Supply-side think tankers and Southern conservatives dominated the GOP. . . .
Year followed year, and the idea of a cohesive financial establishment seemed increasingly like a thing of the past. . . . No more. Over the past week, Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and Tim Geithner of the New York Fed have nearly revived it. At its base, the turmoil wracking the world financial markets is a crisis of confidence. What Paulson, et al. have tried to do is reassert authority -- the sort that used to be wielded by the Mellons and Rockefellers and other rich men in private clubs.
Inspired in part by Paul Volcker, Nicholas Brady and Eugene Ludwig, and announced last week, the Paulson plan is a pure establishment play. It would assign nearly unlimited authority to a small coterie of policy makers. It does not rely on any system of checks and balances, but on the wisdom and public spiritedness of those in charge. . . .
So we have arrived at one of those moments. The global financial turmoil has pulled nearly everybody out of their normal ideological categories. The pressure of reality has compelled new thinking about the relationship between government and the economy. And lo and behold, a new center and a new establishment is emerging.
The Paulson rescue plan is one chapter. But there will be others. . . .The country will not turn to free-market supply-siders. Nor will it turn to left-wing populists. It will turn to the safe heads from the investment banks. For Republicans, people like Paulson. For Democrats, the guiding lights will be those establishment figures who advised Barack Obama last week -- including Volcker, Robert Rubin and Warren Buffett. . . . We're entering an era of the educated establishment, in which government acts to create a stable -- and often oligarchic -- framework for capitalist endeavor.
One of the most enduring and intense pundit fetishes is the fantasy that there is a small, elite group of trans-partisan, centrist, responsible Establishment Wise Men -- the Ultimate Safe and Loving Daddy Figures -- who can ride into any political crisis and rescue the warring partisan masses with their Sober and Powerful Integrity. We just need to call upon them for help, cede them absolute power, trust in them, step aside, and watch the Magic that is Created as a result of what Brooks longingly describes as "the wisdom and public spiritedness of those in charge." Stripped of his neutral observer rhetoric, that's all Brooks is "predicting" -- more accurately, yearning for -- here.
But beyond that, I'd love to know who has been running economic policy up until now if it wasn't these Wise Men from Wall Street? When listing our New Economic Overlords, Brooks identifies the very people from both parties who have been running economic policy for the last decades -- people like Former Federal Reserve Chairman Paul Volcker, former Treasury Secretaries Nicholas Brady and Robert Rubin, current Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and Tim Geithner of the New York Fed. If that is the New Wise Establishment who will save us, who exactly has been dictating economic policy before now?
The central fact -- which Brooks' column aggressively and, by design, suppresses -- is that economic policy in this country has been dictated by Wall Street for the past two decades because Wall Street (meaning the firms and their clients) owns and funds both political parties. The face of Clinton's economic policy of the 1990s, Robert Rubin, had exactly the same background as Hank Paulson, the Treasury Secretary who presided over the current crisis -- former Chairmen of Goldman Sachs. These aren't Sober Traditionalists who shunned the complex derivatives which Brooks blames for this crisis, nor are they part of the "liberal interest groups [that] took control of Democratic economic policy." They're people who became wildly rich as Goldman Sachs led the way in staking the nation's economic health on those reckless instruments.
Brooks' announcement that we're going to vest ultimate authority in them as the New Wise Establishment to save us from our economic policy crises is like announcing that we're going to turn to a New Wise Foreign Policy Establishment composed of Don Rumsfeld, Ken Pollack, Mike O'Hanlon, and the American Enterprise Institute to save us from our foreign policy woes. The most absurd practice in American political life is throwing ourselves into the arms of the very people who have caused our crises, and this is what Brooks is advocating and hoping for here (and, as Howie Kurtz quotes me as explaining in his profile of David Brooks in yesterday's Washington Post, this status-quo-perpetuation is essentially Brooks' defining mentality in the foreign policy arena as well; it's the establishment-subservient function he serves first and foremost).
Several people, including me, wrote yesterday about many of the cynical motives behind opposition on the Right to the Paulson plan, but there is an element of authenticity to that opposition as well. One can look at these economic disputes in terms of "Republican v. Democrat" but, when it comes to economic policy, that is often unhelpful because the core leadership factions of both parties are funded and controlled by the same corporate interests. The same framework shapes foreign policy as well (before being named Director of National Security, Mike McConnell's principal goal in life was to maximize profits from the privatization of the surveillance state, policies to which he also single-mindedly devoted himself as DNI). Often, and certainly now, the more relevant dichotomy is "Plutocrat (or 'kleptocrat') v. Populist," and there are angry populists in the rank-and-file of both parties -- meaning the ordinary voters -- who haven't shared in the very limited and increasingly unequal prosperity created by corporate control of our Government.
This was one of the central arguments of David Sirota's book -- Uprising: An Unauthorized Tour of the Populist Revolt Scaring Wall Street and Washington: namely, that while cultural wedge issues have divided ordinary American on the Left and Right, there is a growing, angry populism among both factions against the dominant Washington establishment elite that is so transparently running the Federal Government on behalf of the tiny group of corporate elite which funds and owns them. The backlash against the Paulson plan on both the Left and Right is a function of that same anger and resentment.
That important dichotomy is illustrated by this list in Roll Call of the 50 Wealthiest Members of Congress -- evenly divided between Democrats and Republicans, composed of many of the most influential and corporate-friendly leaders of both parties (led by many of the key bipartisan enablers of telecom amnesty), and heavily invested in Wall Street. Far more significant is the fact that corporate America funds and thus owns the leading factions of both parties and has long controlled what they do. That's what makes it so bizarre -- so Orwellian -- to read about David Brooks' alleged visions of a New Wise Economic Establishment composed of the very same Wall Street leaders who have been running our economic policy for the last two decades. If there is one thing that's not "new," it's turning over our economic policy to the whims of the Wise Old Men of Wall Street.
UPDATE: On the same Op-Ed page today, one finds these indisputable facts in Bob Herbert's column:
Does anyone think it's just a little weird to be stampeded into a $700 billion solution to the worst financial crisis since the Great Depression by the very people who brought us the worst financial crisis since the Great Depression? . . .
And the people who always pretended to know better, who should have known better, the mortgage hucksters and the gilt-edged, high-rolling, helicopter-flying Wall Street financiers, kept pushing this bad paper higher and higher up the pyramid without looking at the fine print themselves, not bothering to understand it, until all the crap came raining down on the rest of us. . . .
Mr. Paulson himself was telling us during the summer that the economy was sound, that its long-term fundamentals were "strong," that growth would rebound by the end of the year, when most of the slump in housing prices would be over.
He has been wrong every step of the way, right up until early last week, about the severity of the economic crisis.
David Brooks' pretense that the very same people who did this should now be vested with oligarchical power as the "New Establishment" is indescribably deceitful.
UPDATE II: What the David Brookses of the World fear most -- the reason they're so desperate to convince people to put their faith in omnipotent, benevolent rulers -- is this.