Think of this as Volume 16, Number 27 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.
Of all the past crises in American history, today's has most in common with that of 1896 and the years following it.
In other words, we're playing the 1900 game.
As was true at the dawn of the progressive era, today's political argument is over a new economic order. The difference is that the rising tide of that era – mass production, scaled energy – is the falling tide of our time.
Of course that's not the way the other side sees it.
Oil's view is that the entire 20th century consisted of an insane set of mistakes, and their goal is to move us back to the “glory days” of the 1880s, a time when things like regulation, the social safety net, and government of the people rather than the oil-a-garchs had yet to be born.
Back when this guy was the face of American business. (To see him again, click for more.)
The problem with this view is that ignores a central reality of that time. Not just out time, that time.
As Ron Chernow wrote in his Rockefeller biography, “Titan,” the 1880s were not an era of free enterprise. Trusts like Standard Oil organized industries so they could scale and control markets. The alternative, as was learned as early as the 1860s, was a “market” of boom-and-bust, of small producers cutting one anothers' throats, and no one able to create efficiency.
This was true throughout the economy. The alternative to organizing industries under central control was local monopolies choking farmers and manufacturers from growth, and wild swings between euphoria and bust that kept anyone from getting ahead.
We are seeing this right now.
Fracking acted like the discovery of new pools of oil in Ohio or Texas a century ago. It created a speculative fever leading very quickly to a market glut. Which is what we have. At $2.50/mcf, new natural gas production is unprofitable. At $82/barrel, many new forms of oil production are becoming unprofitable. And these losses in valuation are taking the economy down with them. It's as if Sarah Palin got what she wanted in 2008 – drill baby, drill. And now the industry is choking on it.
Of course, reality does not enter into politics. And, as I noted, we're playing the 1900 Game. Obama isn't Nixon. He's William McKinley.
The political differences between today and 1900, for the oil industry, is that back then bought politicians didn't stay bought – the “trust busters” who broke up Standard Oil were big recipients of Standards' campaign contributions – and the industry felt powerless to control popular opinion against the new industries of muckraking newspapers and magazines. PR hadn't been invented yet.
By turning their will to power into an ideology called conservatism, the oil industry has solved both these problems. Any Republican politician who steps out of line can be brought to heel by the “tea party,” fully-funded by the Koch Brothers and other oil zillionaires. Conservative media that follows the oil industry line is also dominant – everything from Fox News to Phil Anschutz' (right) Examiner to the Kochs' own “Cato Institute,” wrapping royalism in the garb of the founding fathers and treating every issue as an all-or-nothing, us vs. them crusade.
The belief, on Wall Street, K Street and in oil industry boardrooms, is that “the people” can be made to believe anything, that they can be led like sheep into rejecting all the protections against feudalism created since John D. Rockefeller rocked a moustache. (Don't believe me? Read any set of comments about the Affordable Care Act.)
The ultimate check against submitting to law and order, ironically created by the Internet itself, lies in the ability to move money to wherever oligarchs can get the best deal. Sheldon Adelson makes his money in China yet thinks he can tell us who will be our President. It's as though America is just Ohio, and its politicians were being bought-and-sold in New York. Which is what Rockefeller was up to in 1900.
Ironically, the best protection against this financial power lies in further centralization, in a global world order that doesn't let lawless billionaires flee the jurisdiction of regulators or tax men. That's just what the Obama Administration is attempting to generate, a global regime of Internet regulation (ultimately financial regulation) and it's what “civil libertarians” in the West are most angry about, seeing it as dictatorship rather than governance.
Then again, the muckrakers didn't like McKinley, either.
