Free-market fundamentalists have been wrong about everything — yet they now dominate the political scene more thoroughly than ever.
Why have the zombie ideas that caused the global financial crisis been so rapidly re-animated.
I think there are quite a few different things going on here. I’ll talk about some, and maybe add some more as the post develops
On the US right (and among its Australian offshoots) there’s a familiar pattern of argument by talking point, with the objective being to score a win for the team, rather than to establish truth. The right wing retreat from reality has been going on for a while, but it really got into full swing with the Iraq War (remember Good News from Iraq?), and totally lost contact with the real universe over climate change. So, swallowing and regurgitating the suggestion that an obscure piece of anti-redlining legislation (the Community Reinvestment Act) forced the great Wall Street Investment bank to buy trillions of dollars of dodgy derivatives is (as you might say) a piece of cake.
Then there is the general pattern of thinking summed up by the catchphrase “no pain no gain”. That’s bad advice in sports training, in medicine (where it gave rise to such disasters as leeches and cupping) and it’s just as bad as a guide to economic policy. Sometimes, it’s true, the policies needed to fix an economic problem involve a fair amount of pain. But that doesn’t mean that painful policies are generally helpful.
Finally, for the moment, there’s the obvious class interest of the financial sector in directing the rage of the Tea Partiers and similar away from them and their rapidly regenerating bonuses.