Extraordinary Observations

Only a few weeks have passed since attendees at McCain/Palin rallies were shouting about the threat of "Obama the Socialist". Whether or not socialism is an ideology to be welcomed or feared is another debate entirely; but it turns out that these individuals may have simply been fighting against inevitability. Two interesting pieces have come out in the past month or so describing the power that two single individuals wield over the entire US economy.

First, James Surowiecki in The New Yorker on the role of the Treasury Secretary:

Still, no Treasury Secretary has ever entered office with as much responsibility as Geithner will have. That’s partly because the crisis is so huge, but it’s also the result of an evolution in the role that we expect government to play in the economy. For much of American history, Treasury Secretaries were nondescript, and their powers circumscribed. When the Panic of 1907 nearly froze financial markets, it was to J. P. Morgan, not Treasury Secretary George Cortelyou, that investors turned for a solution. Our contemporary preference for government rescues has its roots in the Great Depression, when Treasury Secretary Andrew Mellon became notorious for his contention that, even as the economy was collapsing, the market should simply be allowed to do its work. “Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate,” he coldly advised. The perceived failure of this approach discredited non-intervention, and ended up enhancing the influence of Mellon’s successors.

And Brad DeLong in the American Prospect on the Fed Chairman:

Ben Bernanke is the closest thing to a central economic planner the United States has ever had. He bestrides our narrow economic world like a colossus. Unelected (he was appointed by President George W. Bush and confirmed by an overwhelming majority in the Senate) and unaccountable (unless the Congress decides that it wishes to amend the Federal Reserve Act and take the blame for whatever else goes wrong with the economy), he is responsible only to his conscience -- and his open-market committee of himself, the other six governors of the Federal Reserve Board, and the 12 presidents of the regional Federal Reserve banks.

The fate of the economy in the next administration depends far less on the president than on this moral-philosopher-prince to whose judgment we have entrusted a remarkable share of control over our destiny.

Real socialists, of course, are still holding out for universal health care and free college tuition, so Republicans will likely still have some socialist-fear ammunition ready for future election cycles.