Understanding the Current Crisis: "What Will Do the Most to Increase the Concentration of Power?"
Economist Arnold Kling digs Matt Taibbi's groovy extended narrative about the causes and fallout of the economic crisis in a recent Rolling Stone. (I directed interested Hit and Run readers to it in this post from last week.) Kling's summation of the lesson:
I think that Taibbi's basic "power play" narrative is correct. His view that the government money going to AIG is more of a bailout of Goldman Sachs than of AIG strikes me as on target. However, his implication that it is a one-way takeover of Washington by Wall Street is incorrect, in my view. I think that all along we have had a Washington/Wall Street industrial complex, particularly with regard to housing finance.
For quite a while, but especially over the last nine months, the best way to predict developments in politics and finance has been to ask: what will do the most to increase the concentration of power? Every headline, from the Geithner regulatory plan to the proposed cap on the charitable deduction, to the resignation of the General Motors CEO, should be viewed in that light.
Reason's 2007 interview with Taibbi.
