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Is the Problem Really Too Little Trust in Government?
...At issue is what used to be called “Good Government” – the problem of ensuring that a centralized managerial State, with expansive powers to intervene in all matters economic, social, or hygienic, will be run cleanly, and competently, by qualified experts. Dionne insists that financial market meltdowns, oil spills, and coal-mine disasters reveal the catastrophic results of a few years of Bush-era government neglect. Those of us who remember the Bush administration may have a hard time accepting the claim that it was an era in which government was not doing enough; and we see these headline-grabbing catastrophes as only the tail end of a decades-long crisis – a bipartisan, politically created crisis of institutional incentives and industry “best practice-ism,” created, nurtured, and protected by government itself.

So when Dionne reviews a few headlines – the financial-market meltdown, the Gulf oil spill, the coal-mine explosion at Upper Big Branch – he suggests that “It’s hard to argue that the difficulties we confront were caused by an excessively powerful ‘big’ government.”

Really? Let’s try.

“Deregulated” Wall Street collapsed in 2007 after years of unsustainable bubbles and malinvestment by a handful of immensely powerful big players. The real crisis was not just the “crunch,” but the shell game and misallocation that preceded it. The shell game flourished through a private-public partnership between government central banking, cartelized financial industry incumbents, and the industry-connected regulatory enforcers of the government Money Monopoly. The crash certainly revealed powerful corporations acting recklessly. But how did they get so powerful, and why were they willing to take those risks? Because government has, for decades, as a matter of policy, encouraged their dominance, invited their investments, subsidized their loan markets, put them near the inflation spigot, and subsidized their risk-taking with the promise of tax-funded bailouts. In a freed market, “deregulated” Wall Street’s concentrated wealth and reckless business model would not exist....

...To be sure, government is not very distant from the downtown offices of the Washington Post. For the rest of us, though, access is somewhat more limited, and not “all of us” have the same influence in shaping government policy. That is done by political insiders and economic incumbents: As scholars like Gabriel Kolko and Butler Shafer have repeatedly shown, government regulatory bodies from the FTC to the MSHA to the SEC have consistently been captured by the incumbents in the industries they are supposed to regulate, systematically rigging government regulations in such a way as to build up cartels, exclude competition, and protect businessmen from liability for harmful practices.

Trickle-Down Politics

Even with the record of regulatory capture and industry-driven policy, Dionne, like many Progressives, simply insists that politicians need even more trust and fewer restraints on action to give them the independence to do the right thing. You might call this kind of Progressivism a theory of trickle-down politics: When government devotes the overwhelming majority of its power and resources to foolish or destructive programs directed by concentrated interests – subsidies, bailouts, anticompetitive regulations, or an ever-growing military-industrial “National Security” complex – the proposed solution is to give that same government even more strength and greater resources to dispose of, on the hope that some of the surplus will eventually make it through the net of insider control to reach programs that offer a pittance to the little guy....