David Frum admits that there was class warfare, the rich started it, and won.

[elfs]

In an article entitled Two Cheers for the Welfare State, David Frum makes a startling admission:

The radical free-market economics I embraced in the late 1970s offered a trade: Yes, there would be less social provision. In return, Americans would receive an economy that was simultaneously more dynamic and also more stable. There would be less inflation (because the Federal Reserve would have one job: price stability). There would be fewer and milder recessions (because the Federal Reserve would no longer have to extinguish the inflation it did not create). The financial sector could finance faster growth with less risk (because risks would be cushioned by diversification rather than prohibited by regulation). ...

The terms of the trade were not honored. ... Especially after 2000, incomes did not much improve for middle-class Americans. The promise of macroeconomic stability proved a mirage: America and the world were hit in 2008 by the sharpest and widest financial crisis since the 1930s. Conservatives do not like to hear it, but the crisis originated in the malfunctioning of an under-regulated financial sector, not in government overspending or government over-generosity to less affluent homebuyers.

Frum does not delve into the question of why "the financial sector" should grow rapidly, when it's questionable that more than a tiny fraction of the financial sector growth in the past fifteen years actually has had any utility or improved efficiency.

The real startling issue here is that, thirty years after the start of the Reagan Revolution, even conservatives are starting to admit that they've "accidentally" (I call bullshit on that notion) unleashed a wealthy class that, rather than honor both the useful and painful parts of the deal, capitalized what they liked and socialized the pain upon the middle and lower classes.

Frum offers nice pablum about how conservatives "should" bring correctives into policy to ensure that the middle class gets their part of the deal honored.

Good luck with that. As Hacker and Pierson point out in their book, Winner Take All Politics:

Most policy changes with majority support didn't become law. Policy changes only became law when they were supported by those at the top. When the opinions of the poor diverged from those of the well-off, the opinions of the poor ceased to have any apparent influence: If 90 percent of poor Americans supported a policy change, it was no more likely to happen than if 10 percent did. By contrast, when more of the well-off supported a change, it was substantially more likely to happen.

If you're not pulling in half a million dollars in income every year, your voice doesn't matter. At all.

Comments

[lucky-otter.livejournal.com]

I read his statement as saying that the the financial sector could enable faster growth in the economy as a whole, not that it could itself grow faster.

[elfs.livejournal.com]

Hmm, true.

On the other hand, the financial sector did grow faster than the economy, and to our detriment. So, not such a good thing after all.