The recession/depression is less than a year old, but it’s already driving South Carolina’s governing elite over the abyss. Senators Jim DeMint and Lindsey Graham rant theatrically on the Senate floor about the dangers of the Obama administration’s stimulus package. Graham goes so far as to say that passage will destroy the country. Soon he’ll be walking around the rotunda carrying a “The End is Near” sign.
Governor Mark Sanford says he doesn’t want anything to do with Washington’s tainted money. He would prefer more tried-and-untrue deregulation and tax cuts. Never mind the state’s poverty, illiteracy, unemployment and third world infant mortality rate. Sanford hates government, and is content to let the state remain in freefall while waiting for so-called free market wonders to kick in.
The heart of the problem – theirs and ours – is not that our political leaders are conservatives, but rather that they are inflexible ideologues wedded to a failed economic system. They are generals fighting not the last war but the one before that. Ronald Reagan has fallen off his horse. The invisible hand of Adam Smith has slapped us down. The free market first ran amuck then ran aground. Government is now regarded as the solution, not the problem, and this sticks in their craws like day-old cornbread.
Just across the state line, Ken Lewis, CEO of Bank of America, weighs his fall from grace and considers his limited options. Despite an infusion of 45 billion tax dollars last year, BOA is essentially bankrupt. But Lewis tells the Charlotte Observer that it is “absurd” to think that his bank might be nationalized. A day or two later he’s in Washington with the heads of other large banks, all holding their tin cups out and promising to do right. Lewis, unlike our politicians, will take the money gladly. But the banks will likely be nationalized anyway. No one should have to tell him that ownership and control follow like hand in glove.
BOA and SC have one thing in common: they are both insolvent and require a public bailout to stay afloat. A look beneath the surface reveals that things have not changed that much. BOA has benefited from corporate welfare for decades, mostly in the form of tax breaks. SC has been surviving on another form of welfare: the state gets $1. 35 back for every $1 it sends to the federal government. The day of economic reckoning has arrived. Despite his rhetoric, Governor Sanford will swallow hard and take the stimulus money. He’s preparing his (2012) presidential resume and will sacrifice principle for ambition.
Neither the bank mogul nor the politico can cope with the unintended consequences of their blind faith in the market. Hypocrisy is okay as long as it doesn’t morph into tacky; then the game is over. Eating humble pie is humiliating for Lewis, and un-presidential for Sanford. But if either turned his back on the bailout, he would likely be tarred and feathered. Lewis by his board and heirs and Sanford by the 20 percent unemployed in the state’s rural counties.
The high-rolling capitalists who control the banking institutions pushed them beyond their limits. They rejected common-sense regulation and ended up with caviar on their faces. They surely recognize by now that they must get out of the way or accept the new reality. Nationalizing the banks could get credit flowing through the system and separate out the toxic debt, mostly bad mortgages. The moguls will take what they can grab and run.
Not so with our political leadership (sic). They grew up fighting federal interference, and will not change their tune or their minds for a few billion dollars. We can expect to see reluctant acceptance from them, but ne’r a trace of gratitude. They know that the stimulus package will not go far in correcting the many ills of South Carolina. Waiting for failure, they are already practicing their lines: “I told you so.”
The Obama administration should bite the bullet — nationalize and restructure the big banks. Others smarter than I have already suggested this approach. But in the spirit of Jonathan Swift, I would take it one step further with this modest proposal:
Mr. President, nationalize my state, please. South Carolina failed Reconstruction 101, but that was more than 100 years ago. Give us another shot at it, and maybe we’ll get it right this time. Send the governor packing, disband the dysfunctional legislature, and restructure state government. That may be the only way to save us from ourselves.
WAYNE CLARK lives in South Carolina where he writes about politics and current events. His email address is email@example.com