The real road to serfdom

Jack Balkin on socialized capitalism:

The country is currently enmeshed in a very serious financial crisis, one of the most serious since the Great Depression. The causes of this crisis are many, but one of the most important is the deregulatory philosophy that has suffused this Administration. This philosophy has proved intellectually bankrupt and now threatens to bankrupt the country as well. Had the Administration been willing to rein in the financial excesses of the past seven years, the crisis might have been avoided with far less cost to the country.In response to the crisis created in part by its own incompetence and ideological blinders, the Administration now asks for enormous new powers to run the economy in a form of state planning that would make Friedrich Hayek turn over in this grave but would surely bring a smile to Carl Schmitt's lips.

In the latest version of its plan, the Secretary of the Treasury is given authority to take 700 billion dollars (that's 700,000,000,000) from the federal budget and spend it pretty much however he likes, free from any oversight requirements or estrictions that apply to public contracts and especially free from any form of judicial review. (The technical term for this is "committed to agency discretion.").

Oversight and regulations of public contracts are designed to prevent malfeasance, corruption, self-dealing and conflicts of interest in the distribution of federal monies. (Here is a brief history of the Bush Administration's sorry legacy of squandering taxpayer money.). The Administration wishes to dispense with all of these restraints and precautions, just as it sought to run the Iraq war on no-bid contracts. That was bad enough, but here the dangers of bad deals and conflicts of interest are staggering. The Secretary is asking for authority to bail out Wall Street and enter into negotiations with financiers who include important parts of the political and financial base of the Republican Party. Not only will the Secretary be figuring out appropriate compensation for these people, he will also to a certain extent be deputizing a number of them to carry out a wide range of functions for the government.

Put differently, the Administration wants the Secretary to take over a sizable chunk of the nation's capital and insurance markets, and run them as a firm. It is a merger of public power and private capital that would have made a 1930s advocate of state corporatism proud. And because the Secretary's power is effectively unreviewable, he can make sweetheart deals with any or all of the firms and financiers that got us into this mess, providing handsome compensation packages to outgoing executives or, in the alternative, bring these failures into the government to run the new grand public/private business enterprise.

There is much more at the link, but you get the point.