Now comes MSM “conservative” columnist for the New York Times David Brooks to preview and comment on the new book Reckless Endangerment by Gretchen Morgenson, also of the Times, and the financial analyst Joshua Rosner. Endangerment tells the story of the role played by the Federal National Mortgage Association, aka Fannie Mae, in the recent mortgage bubble collapse. The story has been told elsewhere and in great detail, but strangely it has been ignored by the MSM until the publication of this book (although it remains to be seen how thoroughly the MSM will pick up on it—coverage equal to that of Anthony Weiner’s carelessness should be the minimum).
The angle that Brooks plays is telling. “[T]he most devastating scandal in recent history,” he writes, “involved dozens of the most respected members of the Washington establishment. Their behavior was not out of the ordinary by any means.” Morgenson and Rosner’s narrative of the “cancer that helped spread risky behavior and low standards across the housing industry” is a surprise only to those who have no capacity for self-reflection.
It is, as Walter Russell Mead also noted just last week, a prime example of how the “fierce commitment of progressive lobbies today to dysfunctional institutions and programs has brought matters to a crisis stage; the progressive legacy is morphing from white elephant to shark.”
Mead takes a broader—and much more sobering—view of these matters than does Brooks. He recognizes that human endeavors, like humans ourselves, have lifecycles. His writings over the past six months have been an extensive and in-depth analysis of the lifecycle of what he calls “Liberalism 4.0”—the mindset and resultant governing structures and programs that began over a hundred years ago with the Progressive Movement and culminated in the Great Society of Lyndon Baines Johnson in the 1960s.
He credits the founding progressive fathers and mothers with worthy motives and a noble heritage. They, like we are today, were dealing with a world changing swiftly into something powerful and strange for which they were utterly unprepared.
In the late nineteenth century, the rise of huge industrial corporations created yet another force that threatened to crush individual liberty; 4.0 liberals began to think about the state as a possible ally to defend individuals from unaccountable private power.Classically liberalism has been the determination to promote individual liberty over tribal, monarchical, or economic enslavement. In Mead’s view, our Progressive forefathers were fearful of the “octopus,” to use Frank Norris’ chilling image, of monopolistic combines that threatened to impoverish the average American at a time when the nation’s aggregate wealth was undergoing explosive growth. The progressive revolt in California against the political and economic dominance of the state by the Southern Pacific Railroad led by Hiram Johnson is a classic example of the determination of the champions of the liberal idea to defeat what they saw as the latest version of a suffocating monarchy.
There were other problems. Agrarian America had been a relatively egalitarian society when it came to incomes; the industrial revolution and mass immigration threatened to divide society into paupers and millionaires. Agrarian America had also been relatively homogeneous, culturally speaking. Most Americans had been Protestant and either from Britain itself or from relatively similar cultures in northern Europe, like those of Germany and the Netherlands. A society including millions of impoverished urban workers from radically different cultural backgrounds could not be run exactly the same way as in the past; the situation grew even more complex as millions of African-Americans left Dixie for the big northern cities after World War I.
Part of Johnson’s strategy for breaking the back of the ruling oligarchy was the introduction of the initiative, referendum, and recall. These he saw as mechanisms for the voters to override decisions of a legislature or office-holder acting too much for the benefit of private interests to the disadvantage of the public.
And yet, as Mead points out, these innovations have had a lifecycle, and it has been a long time since they were used as intended. Instead, they themselves have become, by and large, a tool for special interests to carve out something for themselves that the legislature or governor would not or could not support.
Many of us have sensed that the ruling institutions and presumptions of Liberalism 4.0 have been losing their authority since Nixon’s resounding defeat of George McGovern in 1972. The problem is that a Liberalism 5.0 that takes freedom and the institutions that express it to a newer level have not yet emerged. Ronald Reagan’s presidency had the effect of slowing down the growth of the nanny state, but he never offered something more powerful and compelling in its place.
As a result, the Church of the State is still very much with us, and we are still fighting wars against its peculiar brand of official stupidity, corruption, and venality that are on full display in Reckless Endangerment.
But at least Brooks clearly identifies the problem:
Morgenson and Rosner write with barely suppressed rage, as if great crimes are being committed. But there are no crimes. This is how Washington works. Only two of the characters in this tale come off as egregiously immoral. Johnson made $100 million while supposedly helping the poor. Representative Barney Frank, whose partner at the time worked for Fannie, was arrogantly dismissive when anybody raised doubts about the stability of the whole arrangement. [Emphasis added.]This echoes Mead:
When enough progressive programs have become both unsustainable and untouchable, we move to the final stage. It is bad enough when a government program becomes a shark; it is much, much worse when a social paradigm as a whole jumps past the shark stage. A cluster of unsustainable but untouchable policies and institutions sooner or later reaches the point when it no longer threatens the country with ruin at some indefinite point in the future: imminent ruin stares us direct in the face.When we look around the world, we see clearly the death of the old industrial order. And it is not pretty. As humans we are designed to defend that which gave us pleasure and advantage; Tom Peters’ famous injunction, “if it ain’t broke, break it,” is simply too counterintuitive for most of us to adopt as a way of living. And so our elites, who are a reflection of our collective selves, find themselves reflexively defending a liberal status quo that has completely run out of steam, and all they have left are rhetoric and rage (and hopium).
That is part of what happened in Ireland, Greece and Portugal, and what may yet happen in Italy and Spain. Disastrous government policies became more politically entrenched even as they became more unsustainable until quite suddenly, they could not be sustained and the whole system came crashing down.
When that happens, what crashes is not just one program. A whole system, a whole social contract falls apart. And if the crashes in these peripheral European economies shook the EU and the world economy, a full scale meltdown in the United States would likely be a shock as profound as the 1929 meltdown. It wouldn’t just be an economic disaster for the United States; it would likely be a historical disaster leading to crisis, upheaval and war around the world.
The future is being made by entrepreneurs, rogues, crazy people, visionaries, and people with a commitment to building outward from the core of excellence that created the greatest society on earth and produced the most prodigious amount of wealth any species on the planet could have contemplated.
The RB has complete faith in the classical liberal values of the Founding Fathers (Liberalism 2.0) and Mr. Lincoln (3.0). He knows that these still reside in the hearts of most Americans, and will be the source of the next rebirth of freedom that even now is beginning to make its presence known.
For evidence look no farther than to see that, for once, even the New York Times has had to acknowledge it.