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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.)

You can’t remove the “problem” from a convoluted, intertwined construction such as that because it’s behaving precisely the way one would expect it to while operating under the rules which we ourselves established.

I know precisely what this sort of hang-dog, defeatist attitude and general condemnation of the American way sounds like. It’s a revival -- or perhaps an evolution -- of the nihilist movement of the 19th century. I may not be the father of American neonihilism, but I may still add to the eventual manifesto of this version without falling into some deep pit of Nietzsche worship.

We're engaged in a tug of war. On one side are those who would let the free market capitalist system run wild, trusting in “the invisible hand” to keep everything on an even keel. On the other, we find the forces that would see government shackle that system's actions and redistribute the wealth of the winners among the populace. But unlike a normal game of this sort where the opposing teams seek to pull the enemy into the central ditch, this game places a bottomless pit behind each group and nobody can let go of the rope. No matter who wins, they fall into the abyss and pull the opponents down with them.

A person much smarter than I once defined all of humanity as being divided into alpha and beta types. He posited that if you enacted one fell swoop to seize and redistribute all of the wealth in the nation equally among everyone, the same set of Alpha types (with a few variances for those who smartened up) would quickly rise back to the top. The system is not dissimilar to a casino in Vegas. It's all winners and losers, but the Alpha types will be the ones who are smart enough to run the casinos and the Beta types will be the suckers who travel to bet in them. The house always wins, eventually grinding all the wealth from the pawns until there's nothing left to bleed out.

But how do we go about fixing this? The short answer, I’m sorry to say, is that you can’t. Letting the free market system run wild eventually runs you out of suckers, to continue the previous analogy. You see a greater and greater gap between the wealthy elite and the masses until they begin to take to the streets. (For the record, I am not implying that this is happening now or that the current “occupy” movement participants are the vanguard of an imminent, violent renaissance. Only that we’re observing a long-term trend in one direction for the flow of wealth.)

But moving in the other direction -- shifting ever increasing regulatory power to the central government (should the suckers ever find a way to elect representatives who would "fight the power") -- will eventually result in such a disincentive to succeed that nobody would even bother trying. Each pull on the rope shoves you further towards one of the two chasms.

I would love to propose some bold, political solution which produces a salable course of action, but both of these general approaches are essentially impossible to begin with. To manage that level of control over the interaction between the conjoined twins would effectively amount to dismantling the entire constitution and setting up some hybrid of communism and socialism. At that point, the shining light on the hill is effectively extinguished and the game ends.

Jon Corzine -- and if the charges bear fruit, Nancy Pelosi -- at the end of all things, are neither heroes nor villains. They are not the disease you seek to cure, but rather the symptoms of a disease. And the cure is as far beyond the political-medical technology of our society as space travel would be to Neanderthals. They are an end product. They represent what finally drips out of the fetid, cracked glassware of the apparatus long after the scientist has left the experiment to run on its own for too long.