As the economic meltdown of 2008 continues, some are hearing echoes of the Great Depression. And if this is another 1929, the next president could well be another Franklin Roosevelt. That's what Barack Obama seemed to be aiming for when he said last Friday, "This is not a time for fear. It's not a time for panic. It's a time for resolve and a time for leadership. I know we can steer ourselves out of this crisis, because we have done it before. That's what we do as Americans."
The financial crisis is affording Obama the opportunity to emulate that greatest of Democratic presidents in an important way: It has led him to put ideology at the heart of his argument to the public. Obama seems to have realized that the crisis has created a unique ideological moment, one in which the differences between progressivism and conservatism can be made clear even to those who ordinarily have only the fuzziest notion of what those differences are.
Until now, most Democrats haven't exactly been eager to make a case for the necessity of government regulation in any area, particularly in the economy. They have often been spooked by the satisfying simplicity of the other side's rhetoric: Markets are good, government is bad; markets embody freedom, government restricts freedom; markets reward those with the good values of hard work, ingenuity and risk-taking, government rewards only the shiftless and the dependent.
But this is truly a new day, unlike any I can recall. The Bush administration, until now as committed as any since Hoover's to unfettering business and serving the interests of the moneyed elite, has embraced so much government intervention in the economy that the next thing you know, they'll be nationalizing the steel industry.
This has left John McCain adrift, seemingly unable to square his long-held opposition to regulation with the new consensus. It wasn't surprising to see him reject a government bailout of AIG last Monday, then embrace it two days later. He knows neither what to think nor what to do. His attempts at populist rhetoric come out sounding both insincere and silly -- on Friday, he even promised that he and Sarah Palin "are going to put an end to the reckless conduct, corruption, and unbridled greed that have caused a crisis on Wall Street."
Putting an end to greed would certainly be a feat unprecedented in the history of humankind. McCain did not elaborate on how they would accomplish it -- perhaps he and Palin will wander the streets of Lower Manhattan, laying hands on anyone they spot dressed in a suit, until the hearts of the sinners are softened and thoughts of BMWs and weekend homes in the Hamptons flutter out of their heads to be entertained no more.
As a new convert to the necessity of regulation, what McCain seems not to grasp is that the purpose of regulation isn't to turn people into saints, it's to prevent their less-admirable impulses from harming others. Environmental regulations don't make chemical companies lose their desire to ignore the consequences of pollution; they impose a cost on those companies for doing the wrong thing. In other words, regulations appeal to a whole different set of desires (i.e., the desire not to get fined and prosecuted). Regulation of financial-services companies doesn't eliminate greed; it prevents greed from destroying the market.
But McCain can't exactly turn his back on the conservative free-market fundamentalism that has animated his party for so long. That conservative dogma is all he knows, though he may feign a new interest in government oversight. It was conservatism that led Phil Gramm -- about whom McCain said earlier this year, "There is no one in America that is more respected on the issue of economics than Senator Phil Gramm" -- to introduce the legislation that most directly brought us the current crisis, an amendment to a 2000 omnibus spending bill that forbade the government from regulating credit default swaps. Ideology determines a person's default setting in the face of uncertainty -- McCain may not have known a credit-default swap from a ham sandwich, but he knew it meant "less regulation," so he supported Gramm's amendment, along with so many other attempts to get government out of the business of regulating the economy.
But now the public is wising up. They realize that not only is conservative free-market fundamentalism incapable of solving the current crisis but that it was conservative free-market fundamentalism that created the crisis. So now would be an opportune time for Barack Obama to join his critique of conservatism to an affirmative case for the economic superiority of a progressive approach to the economy. The public is already convinced of the need for oversight.
So Obama should say the following to both Big Business and Small Business: "I know you've supported Republicans for a long time. When they said we had to remove all economic regulation and oversight, it sounded good to you. But look where we are now. We took away the ounce of prevention, and we're stuck with the pound of cure. Has the last eight years of conservative government been good for business? It sure doesn't look that way. Businesses are suffering, Wall Street is suffering, and ordinary people are suffering. We're reaping what conservative economics sowed."
Each day's development makes clear that this crisis will be one of the key economic and political events of the 21st century. When the next Republican presidential candidate -- and the one after that and the one after that -- comes peddling free-market fundamentalism, they should have the events of September 2008 shoved down their throats. Obama was absolutely right when he said, "We did not arrive at this crisis by some accident in history. What led us to this point was years and years of a philosophy in Washington and on Wall Street that viewed even commonsense regulation and oversight as unwise and unnecessary." Try though he might to escape it, that is John McCain's and his party’s philosophy.
"The events of this week," Obama said on Friday, "have rendered a final verdict on that failed philosophy, and it will end if I am president of the United States." If he wants to be another FDR, it would be a good place to start.