BARACK OBAMA: I think it's good that Sen. McCain is celebrating the American worker today. But it would have been nice if, over the last 26 years that he's been in Washington, that he actually stood up for them once in awhile. [cheers]What Obama refers to as "a failed economic theory" is actually a host of theories espoused by the likes of Phil Gramm, once (still?) McCain's closest economic advisor. Gramm believes in the Chicago school of economics, also known as "market fundamentalism." This ideology revolves around an irrational, dogmatic belief in the universal benefits of deregulation and privatization, despite empirical evidence which demonstrates the limitations of a market economy, especially in a democracy.
It would have been nice if he didn't vote against the minimum wage 19 times. [cheers] Or if he didn't vote to privatize Social Security and hand it over to Wall Street. Sen. McCain, you can't run away from your words, and you can't run away from your record. When it comes to this economy, you've stood firmly with George Bush and a failed economic theory and what you're offering the American people is more of the same.
KEITH OLBERMANN: So he [McCain] believes the economy is strong. And the Bush administration seems to be betting that the financial system can handle the collapse of Lehman Brothers and whatever is to follow without any intervention or any major intervention at this point. How...
PAUL KRUGMAN: That's not quite right, actually. What they're doing is throwing a lot of money at the financial system in general. There wasn't a specific, so actually, the taxpayers are being put on the hook. There's been a lot of moral hazard, as they say, being created. That's why the Dow fell only 500 points today, because there's a lot of money being pushed out that is ultimately taxpayer money.
OLBERMANN: So when Gov. Palin said today it was good to see that the government was not going to come in and spend any taxpayer money on Lehman Brothers, she was misinformed?
KRUGMAN: Yeah. I mean, it wasn't Lehman, it was sort of what the left hand took away, the right hand pushed onto the roulette table. So it was, unfortunately it's still not true. We're actually seeing a socialization of risk. I'm not sure there's an alternative, because the deregulation policies pushed us into this. But no, risk is still being socialized. It's just they decided that Lehman was not going to be the place where they made the stand.
OLBERMANN: Is McCain actually a difference from Bush?
KRUGMAN: You know, if he had said at any point, look, you know, we need some regulation, we need some policing. If there was, I've actually been trying to see if I can come up with any one on the Republican side who had said anything about the housing bubble, who warned about sub prime. You know, I can't see it. The fact of the matter is, what he says is, we're going to clean up Washington, clean up the markets I don't understand.
KRUGMAN: Whatever they may say officially, everybody knows that if McCain becomes President, Phil Gramm is the odds-on favorite to become Treasury Secretary.
OLBERMANN: What would that do to the American economy?
KRUGMAN: Ben Bernanke and I think Hank Paulson understand that we could manage to have another Great Depression if we work at it hard enough. I think Phil Gramm might be just the guy to do it.
When I was 16 years old, I won a citywide competition in Economics. At the time I was influenced greatly by Milton Friedman, the patriarch of the Chicago school. Later I went on to major in Economics and was just a few credit hours away from getting my degree when I had an epiphany during a lecture on price theory. I walked out of class that day and went straight to the Dean's office to change my major to something more honest.
Ever since I've struggled to understand why America's business and political leadership, and this includes John McCain and Phil Gramm, hasn't yet realized what I came to understand when I was barely an adult. Milton Friedman was wrong.
Then again, maybe they know it, too.