You look at the drawing and you see a hag. You look at it again and you see a fashionable young woman. Psychologists say that, given an optical illusion, people see what they expect to see. Thus, the left looks at the economy and sees corporations yoked with government: a proto-fascist state. The right looks at the same economy and sees government yoked with corporations: a proto-socialist state. In good times, people often see only public-private partnerships: the young woman. In tough times, though, people see crony capitalism: the hag. And these are tough times.
Crony capitalism is a pragmatic, expedient thing. It's only marginally ideological, a product as much of the left as of the right. It has much to do with crony, little to do with capitalism – which is a market economy subject to minimal state interference.
As both the Tea Party and Occupy demonstrations have coincidentally confirmed, the American public regards the most egregious transgressions in the Great Recession of 2008-2009 as the bailout of the big banks. These actions were largely bipartisan – undertaken by Republican George W. Bush and Democrat Barack Obama, by the Democratic-controlled Congress and by the nominally independent Federal Reserve.
The question is not which of the political parties is the greater crony. The question is which institution makes the final decisions: the corporations, the state or the Fed, itself an entity with the authority to tell both the White House and the banks what to do in times of crisis. If the dominant partner was Wall Street, the left is right (and we have a proto-fascist state). If the dominant partner was government, the right is right (and we have a proto-socialist state). If the dominant partner was the Fed, the left and the right are both wrong (and we have government by technocracy).
Mr. Bush got the great bailout started in October of 2008, with a paltry $700-billion (U.S.). He anguished over this "breathtaking intervention" in the markets. ("The last thing I wanted to do was bail out Wall Street.") The Senate vote for the bailout was bipartisan: 74-25. The House vote was also bipartisan: 263-171. Indeed, Democrats supported Mr. Bush more enthusiastically than Republicans (House Democrats favoured the bailout 172-63; Republicans voted against it 108-91).
When Mr. Obama took office in January of 2009, he embraced a radical extension of the bailout (at a temporary cost of trillions of dollars). In his first State of the Union, he said: "If there's one thing that has unified Democrats and Republicans, and everybody in between, it's that we all hated the bank bailout. I hated it. You hated it."
Why expand what he hated? He knew Americans didn't want it. His most often-asked question, he said, was: "Where's my bailout?" He understood the opposition: "It makes sense intuitively. It makes sense morally."
Mr. Obama could have sent a $10,000 cheque to every man, woman and child in the country, instead. People would have spent some of this money and paid down debt with the rest – equally productive uses. The risk-adverse banks, in contrast, sat on the bailout money.
In the end, who ordered the bailouts? Michael Moore, the left-wing provocateur, made his position quite clear when he explained why Occupy Wall Street had no interest in occupying the White House or Congress: "We're kind of tired of going and dealing with the middleman or the servant." Mr. Moore is partially right. But he will wait a long time before a global company volunteers to sever its rewarding relationships with governments. Crony capitalism can be ended, or restricted, only by going through the White House and two legislative chambers – a daunting task.
The bank bailout crises remain instructive. A Republican president was compelled to do what he didn't want to do. A Democratic president was compelled to do what he hated. What, then, made them do it? Was it the Fed, the only entity of government that asserts macro-economic omniscience? Perhaps Mr. Bush and Mr. Obama simply lacked the courage, or the confidence, to say no – and, instead, insure depositors (Main Street) rather than banks (Wall Street). If so, an awesome transfer of power has taken place in the land of the free and the home of the brave.