The Logical Extreme of the 'American System'

Some time back I penned an article for these pages on the Occupy Wall Street movement which found a fair bit of popular appeal with conservatives. The reason for the convivial attitude among many of our readers was that it criticized the protesters’ lack of focus and their poor target selection for their complaints. Unfortunately, some observers took this as a de facto endorsement of Herman Cain’s oft cited admonition to the hippies in the streets in which he suggested they take their protest to the White House. This is also an incorrect course of action.

It is true, at least to a limited extent, that problems involving perceived abusive -- yet legal -- behavior by financial institutions can be connected to questions of regulatory policy in Washington. But even if there were some magical panacea to be found, one would certainly need to be protesting Congress every bit as much as the president. Yet such thinking leads us to falsely conclude that we could cure these perceived ills though the simple act of replacing one person in the federal government -- or 535 of them for that matter.

The point I had tried -- and failed -- to make in the original essay was that the litany of complaints brought forth by the self-identified 99% are not being caused by some enigmatic Star Chamber of Wall Street barons, nor even by the obvious and rampant incompetence of our elected representatives. The conditions they are observing and railing against are the larger, long-term results of a system which is operating precisely the way it was designed, but taken to its illogical extreme, helpfully aided by the fundamental ambitions and nature of mankind.

I was reminded of this when I read an article by Doug Mataconis detailing the sins of Jon Corzine and the recent collapse of the MF Global investment firm. It serves as a perfect, microcosmic example of precisely what I’m driving at. He writes:

If nothing else, a story like this demonstrates one area where there’s possible unity between the Occupy Wall Street crowd and their critics. The kind of incestuous relationship between business and government that Corzine’s lobbying, indeed his entire career, represents is something the left and right ought to be able to agree is bad for the country, and for the economy. Corzine also stands as proof that crony capitalism is not solely a Republican phenomenon (although one would have thought that the case of Chris Dodd would have established that definitively), it’s a universal problem related to businessmen who see the ever expanding government as a tool to advance their business interests, and politicians willing to sell themselves.

What Mataconis identifies is, yet again, not the genesis of the problem, but rather a very high profile symptom of it. Corzine is a man who shifted fluidly between the two pillars of our American system -- free market capitalism and a representative democratic republic -- eventually infecting the government side from the private sector.

To see an example of the opposite side of that coin, we need look no further than the recent breaking news suggesting that members of Congress -- including former Speaker Pelosi -- may have profited from insider trading opportunities in the stock market. You might well tell yourself that, if true, Ms. Pelosi is in deep trouble and may wind up spending some time at the Crowbar Motel, right? Well, that’s not going to be the ending to this particular fairy tale, because members of Congress are protected from prosecution for insider trading.

Are you beginning to see the larger picture?

The crisis we’re dealing with was actually identified back in the 1920s by H.L. Mencken in the fourth of his six-part series, Prejudices. In it, he identified the two sides of the great American experiment – our representative democratic republic and the free market capitalist system -- as “the conjoined twins.” Each is wonderful and praiseworthy in its own right, but they are locked together in a way which eventually becomes toxic to both.

We have, over the course of more than two centuries, fashioned for ourselves a society where, as I previously noted, the citizens are set loose to go forth and gather in all the wealth and power they are able to accumulate, and a few of them wind up being spectacularly successful at this. On the other side of the fence you have a representative form of government composed of elected officials who are ostensibly in a position to keep an eye on the store. But the aforementioned wealthy and powerful citizens not only take part in selecting those representatives -- and with a vastly enhanced proportional influence than the unwashed masses, to boot -- but they can actually become the government themselves for a time. (Case in point: Corzine.)