Did the Tea Party Change Anything?

I know it has to be have been a frustrating election cycle for the Tea Party, and there is a natural human desire to find something good in bad news. But if the Tea Party went away today I’m having a hard time understanding exactly how it would have made a difference in our government. The situation that I think sparked the anger that lead to the Tea Party, the bank bailout. But none of the intertwining between big government big finance that led to the bailout has been undone. Financial institutions are still free to sell trillions of dollars worth of derivatives to each other, exactly like the ones that caused the need to bail out AIG. Unregulated Hedge Funds are still free to borrow billions of dollars from the regulated economy to gamble on derivatives. Government spending is still far higher than it was when George W. Bush became president. What has actually changed? How is our country on a different path?

To my mind, at the root of this ineffectiveness was a very basic misunderstanding of the role of government – most of these bad things happened not because of too much government regulation, but rather because of too little. The idea of insurable interest, that you can’t buy insurance on something you don’t own, goes back to English Common Law. And yet we abandoned it – derivatives are insurance policies. The idea that we should limit the amount of money financial institutions borrow goes back to the 1930s, and did a great job in reducing risk. We abandoned it. This is the paradox of the Tea Party – most of the things that made it the maddest happened because we lessened regulation, not because of too much regulation.

And somewhere deeper, there was a misunderstanding of the intersection of the government and the free market. Somewhere Tea Parties came to the conclusion that a free market can only happen absent a role for government. But the economic reality is just the opposite – a free market, especially at the national level, can only exist through the power of the federal government. A federal government that makes sure that every individual has access to a safe banking system, and that the natural tendency of monopolies to develop is curtailed. A federal government that takes seriously its obligation to insure that all men and women have an equal opportunity to participate in our capitalist system.

It’s hard to know where the Tea Party will go from here. A movement that began with a very justified anger at the direction of our country didn’t really change the direction of our country. Instead its anger was coopted by the very interests it claimed to be against; the Tea Party, at the end of the day, was used to protect the very interests that are undermining our country.

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