Hamiltonian Ends with Jeffersonian Rhetoric

Given all the Jeffersonian symbolism of the Tea Party movement—the Gadsden Flag, the Jefferson quote about nourishing the tree of liberty, etc.—you might be surprised that Dick Armey, founder of Freedom Works and a leading presence in the Tea Party movement, is a fan of Alexander Hamilton.

You might be surprised, that is, unless you’re a historically illiterate ignoramus like Dick Armey.

Those of us familiar with the real-world actions of “small government conservatives” like Armey, of course, are only surprised he admits he’s a fan of Hamilton.

“Hamilton” shouldn’t even be on the same page as “small government conservatism,” let alone in the same sentence, unless the word “not” is also in there somewhere.

Hamilton would be the perfect choice for patron saint of the TARP program, both the Paulson and Geithner versions (in Hamiltonian terms, there’s no difference between them).

Hamilton’s first important act as Secretary of the Treasury was to pay off Revolutionary war bonds at their original face value—even though their market value had depreciated to a few pence in the pound and the vast majority of them were held by people who’d bought them off the original investors for almost nothing.   That’s right—Hamilton’s policy was to prevent the assets of the investor classes from collapsing to their real market value, by using taxpayer money to prop up their “mark to make-believe” face value.   If he wouldn’t love Paulson and Geithner, who would?

For the vast majority of people today, as in the 1780s, the liquidation of debt and deflation of assets (with lenders and investors eating the loss of course) would be a good thing.  But the U.S. government today, like the U.S. government in the Washington administration and Japan’s government in the “Lost Decade,” has undertaken the uber-Hamiltonian project of relying on massive taxpayer bailouts to stop this from happening.

Blogger C. H. Smith describes the “Lost Decade” as Japan’s attempt “ to defeat debt-liquidation deflationary forces with massive government borrowing and spending, and a concurrent bailout of ‘zombie’ (insolvent) banks with government funds.”  Sound familiar?  Smith predicts the attempt will have the same result in America as it did in Japan:  “…an asset bubble inflated with highly leveraged debt pops and the value of real estate and stocks declines. But the high levels of debt taken on to speculate in stocks and housing remain.”  The policy, in both cases, is the same:  “Rather than let the private-sector which accepted the high risks and took the enormous profits take staggering losses and writedowns, the government and central bank shift the losses from the private sector to the public balance sheet via bailouts and outright purchases of toxic/impaired private debt.”

The Republican Party is the direct heir to a long line of Hamiltonians, all seeking to use state power to promote the interests of the plutocracy and the wealthiest and most powerful businesspeople at the expense of working people.  This was true of Hamilton’s Federalists, of Henry Clay’s Whigs, and of the Republicans.  Abraham Lincoln, in announcing for Congress, declared himself for a high tariff, a national bank, and internal improvements—and referred to Clay as his “beau ideal of a statesman.”  The GOP went on to carry out the state-directed corporatization of American life in the Gilded Age (otherwise known as the Great Barbecue).  It’s been argued that TR’s “Progressive” intellectuals, with their Hamiltonian agenda of “partnership” between Big Government and Big Business, hijacked the Democratic Party in 1932.  Since then, the two parties have been trying to out-Hamilton each other.

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