How do once-free people lose their liberty? The formula may be stated succinctly: crisis and leviathan. Alternatively, and somewhat more fully stated, the procedure for the government officials and their supporters who hope to gain by quashing the people’s liberties is (1) cause a serious crisis, thereby heightening the public’s fears, and (2) blame others for the crisis, pose as the people’s savior, and thereby justify the seizure of new powers allegedly necessary to remedy the crisis and to prevent the recurrence of such crises in the future. This gambit is as old as the hills, yet, given the right ideological preconditions, it works every time. Strange to say, the people never learn (in part because these experiences produce ideological change that fortifies the fiscal and institutional changes the government makes during the crisis).
Today’s news brings us a perfect illustration — one of many during the past year of financial debacle and worsening economic recession. According to an AP report, “Treasury Secretary Geithner asked Congress on Tuesday for broad new powers to regulate nonbank financial companies.” Geithner, of course, earnestly expressed the finest motives: “We must ensure that our country never faces this situation again.” Geithner’s partner in crime, Fed chief Ben Bernanke, joined him in “calling for greater governmental authority over complicated and troubled financial companies.” These rulers of the universe want the legal power “to seize control of institutions, take over their bad loans and other illiquid assets and sell good ones to competitors.” (Extra-credit question: haven’t they been taking precisely such actions for the past year or so?)
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