Banana Republic Watch
By Arnold Kling
Who wrote this? Answer below the fold. The mystery author writes,
The finance sector’s increasing concentration and growing political muscle have undermined the traditional American understanding of the difference between free markets and big business. This means not only that the interests of finance now dominate the economic understanding of policymakers, but also — and perhaps more important — that the public’s perception of the economic system’s legitimacy is at risk.
You might guess James Kwak or Simon Johnson. It seems very Baseline Scenario-ish.
However, in this case, it does not come from the left of center. Instead the words are those of Luigi Zingales, writing in a new journal called National Affairs, which is modeled after an earlier journal called The Public Interest.
Zingales goes on to say,
We thus stand at a crossroads for American capitalism. One path would channel popular rage into political support for some genuinely pro-market reforms, even if they do not serve the interests of large financial firms.
The alternative path is to soothe the popular rage with measures like limits on executive bonuses while shoring up the position of the largest financial players, making them dependent on government and making the larger economy dependent on them…This is the path to big-business capitalism: a path that blurs the distinction between pro-market and pro-business policies, and so imperils the unique faith the American people have long displayed in the legitimacy of democratic capitalism.
Zingales says, and I agree, that the Obama Administration is inclined to go down this path (as was the Bush Administration under Bernanke, Geithner, and Paulson).
In another article in the same journal, James Capretta describes the role of middle-class entitlements in fiscal policy. This is another aspect of the Banana Republic trajectory.
In still another article, Steven M.Teles offers a sympathetic account of compassionate conservatism. He writes,
Compassionate conservatives could rebuild their linkages with reformist Democrats, changing policy slowly by reshaping the conventional wisdom in both parties.
If we’re headed toward Banana Republicanism, I think compassionate conservatism is part of the problem, not part of the solution.
Finally, W. Bradford Wilcox documents the trends in marriage and social class.
now that the institutional model has lost its hold over the lives of American adults, sex, children, and intimacy can be had outside of marriage. All that remains unique to marriage today is the prospect of that high-quality emotional bond — the soul-mate model. As a result, marriage is now disproportionately appealing to wealthier, better-educated couples, because less-educated, less-wealthy couples often do not have the emotional, social, and financial resources to enjoy a high-quality soul-mate marriage.
Have a nice day.