The defenders of the economic orthodoxy have gotten much more shrill of late. In a perverse way, this is probably a positive sign: they might be feeling a tad worried that they are starting to lose their hold over consensus reality. But given how quick various media outlets are to pick up and amplify their messages, it would be more than a tad premature to say that the prevailing belief system is threatened.
It may be sample bias, but I’ve noticed two patterns. The first is a sharp uptick in criticism of “populism” or better yet, “populist anger”, which then serves as the basis for arguing that efforts to rein in the financial services industry are overdone. Now usually there is a wrapper around it, like “mistakes were made” or another not-very-convincing bit of crowd pleasing pablum to acknowledge that maybe some change might be warranted, but nothing approaching what those enraged savages want.
Second is a new meme, that of arguing that Congress is really at fault, that they (or “the regulators”) failed to curb excesses in the financial services industry (and you will no doubt see similar arguments surface regarding the Horizon Deepwater disaster). This is a staple of the sort of thing you see from Cato and the American Enterprise Institute, and once in a while gets picked up by the MSM, but we’ve had a positive outburst in the last few weeks (it seems to have coincided with the SEC and Senate salvos against Goldman. The furious pushback seems to result from the panicked recognition that if a firm that gives as much and is as well connected as Goldman is not able to “insure” its way out of trouble, then no one in the executive suite can rest easy).
Notice that arguments one and two are contradictory. The first presupposes that not much more in the way of regulation/oversight is in order (otherwise, those horrid populists might have a legitimate axe to grind) while the second is a tacit admission that tougher rules are needed, but endeavors to shift the blame away from the industry and on to regulators, and more recently, Congress. And ironically, the argument then becomes, “well they botched it, didn’t they, so it’s silly to let them have a second go at it.” That’s simply disingenuous. “Congress” is not static; its membership turns over, its party weights change, its posture adapts to changed moods and conditions. Similarly, the people in regulatory agencies change over time, and they can be emboldened or neutered by their leaders.
To widen the frame further, there has been a concerted forty year push by business interests to deregulate (this is not a mere assertion; I have an entire chapter on this, extensively footnoted, in ECONNED). If you succeed in carrying out the vision of Grover Norquist, to make government so small that you can “drown it in a bathtub”, it won’t be able to rein in private sector interests of any size. That push resulted in reducing both the number of rules and the effectiveness of oversight.
Let’s give a little example: Arthur Levitt at the SEC. I have no way of knowing for sure, but Levitt bears all the hallmarks of an appointee who was expected to give the industry a free pass: he was a former industry exec from a second tier firm and had headed the American Stock Exchange (importantly, he was the first SEC head in a very long time who had not been a lawyer).
Now Levitt was willing to give the industry its head as far as big institutional customers were concerned. In the wake of large scale derivatives losses in 1994 (bigger in aggregate than the 1987 crash), he beat back meaningful regulations, and similarly sided with Greenspan, Rubin, and Summers to ride Brooksley Born out of town on a rail when she tried to regulate credit default swaps. But Levitt was very serious about trying to protect the retail investor. His not very aggressive initiatives were beaten back by Congress, particularly Joe Lieberman (the Senator from Hedgistan). Their big threat was to cut the SEC’s budget, which meant reduced enforcement. So even if he won (sticking to exercising his authority under existing legislation), he’d lose (being denied the budget to do his job, and running the risk of having the SEC’s scope cut back by new legislation).
Now before some readers chime in, “But see, it really was Congress’ fault”, ahem, you need to widen the frame. Regulation, until the banking industry blew up the global economy, was a dirty word. It wasn’t all that long ago that being a senior regulator was prestigious, if not terribly well paid, and most did it for its own sake, not as a stepping stone to big ticket private sector jobs. The line that was sold very effectively, was that regulation simply reduced efficiency and impeded innovation, if we got rid of those pesky rules, the economy could grow faster and we’d all be better off.
Now the bit about regulation impeding innovation is actually false (regulation can spur innovation, as it has with mandates to improve fuel efficiency; moreover, the companies that fought for deregulation were the big boys who had never had had a track record of being innovative; further in the 1970s, they tried talking up an “innovation gap” which did not exist, as in the data actually proved the reverse regarding US innovation; the Carter administration tacitly admitted that by talking up a “perceived innovation gap”). So the real question, that was pushed aside, was, “what is the right balance between safety and efficiency?” There might indeed be cases in which regulations were misguided and called for excessive levels of safety, or were simply bureaucratic and outdated. But the fight to pull down all regulations, willy nilly, left industry to its own devices in a lot of areas as far as safety was concerned. We are now reaping the bitter harvest of taking an idea that might have had some merit well beyond its point of maximum advantage.
But let’s return to the “populism” attack, which sticks in my craw. It’s a not-very-subtle way of denying the legitimacy of the populace’s anger. The taxpayers have just been the victims of the greatest looting of the public purse, and the perps have the nerve to lecture them about their anger?
Two sightings illustrate the arrogance. One is an Financial Times comment “A boot on the throat is no way to do business,” by David Rothkopf. Some key bits:
Admittedly, business is not exactly blameless here. Mistakes have been made. Really big ones. But to respond to the culture of excess and recklessness on Wall Street with a culture of regulatory excess and recklessness in Washington is hardly the answer.
Yves here. This is an insulting straw man argument. Regulatory excesses and recklessness? We have “reform” regulation that is so watered down that it will do perilous little to avert future crises. But corporate leaders have gotten so used to getting everything they ask for that even pesky restrictions are fought tooth and nail. Next bit:
At a time when the business and economic challenges facing the US are dauntingly complex, what is really needed is a dose of humility. That is particularly the case when there are barely a handful of US senators who have even a basic understanding of the markets they seek to regulate. In such an environment, adversarial relationships are in no one’s interest.
Yves here. Humility? Spare me. The ones who OUGHT to be humble, as in begging for forgiveness, are the executives and producers who created such havoc. Instead, they’ve refused to make any pro-active suggestions; worse, they thumbed their noses at the taxpayers who rescued them at colossal cost by paying themselves record compensation in 2009. The right response to that is most assuredly NOT humility; it’s a swift and hard kick in the ass.
I could go on, but you get the drift. Readers with strong stomachs are encouraged to read this piece in its entirety. Its arrogance and dishonesty is striking.
The other sighting was similarly troubling, but in a more subtle way. Jeff Immelt, GE’s CEO, has closed ranks with the banksters. This isn’t surprising, given that GE is heavily a financial services company and would have been in extremely hot water had it not availed itself of some of the rescue programs on offer during the crisis. His remarks, per the Financial Times:
Goldman Sachs has been a partner for GE for a long time. We trust them, they have done great work for us … damning Wall Street isn’t good for the American economy….People need to tone down the rhetoric around financial services and stop the populism and act like adults.
Yves here. The finger-shaking at supposed children is overbearing and authoritarian, and amounts to a blanket refusal to deal with the substance of the bill of particulars against the financial services industry. But the part of his formula that is more revealing is his argument that the interests of Wall Street and “the economy” are aligned, and everyone needs to shut up and get with the program, since hurting the economy will be very bad for them.
But this is bogus. The economy we now have has increasingly shunted the benefits of production to the top 1%. In the 1960s, it was accepted that increases in productivity would be shared between corporations and workers. No more. We’ve seen a persistent gap rise between wage growth and productivity growth, so the gains in employee output have been siphoned off to the managerial elite and investors.
So these populists, despite the hectoring, aren’t stupid or emotional. Quite the reverse. They’ve been snookered by the system one time too many, and have had enough. Primates as well as people are willing to take losses to punish cheaters, and this is deeply rooted, instinctive behavior for a good reason: you need some measure of fairness for societies to function.
It’s the people at the top of the food chain who are wildly misguided. They seem to think if they posture well enough in public, they can restore the order that served them so well. But the hoi polloi understand better that the old paradigm is broken and are demanding new approaches. Ignoring and demeaning their demands isn’t sage and sober; its reckless and wanton. It will take a continued show of resolve to penetrate the orthodoxy’s defenses.
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As the King exclaimed during the peasant revolt, “Serfs up!”.
Thomas Ricks speculates on how the Romans would handle a financial crisis. Unfortunately, this post is archived. I’m pasting it in here:
How would the Romans handle the financial crisis?
Posted By Thomas E. Ricks Tuesday, January 27, 2009 – 5:36 PM Share
The latest round of massive corporate layoffs reminds of the financial crisis the Roman Empire suffered in 33 A.D.
It all began when Emperor Tiberius enforced a ceiling on interest rates, which caused a severe credit crunch, Tacitus relates in The Annals (book VI, 16-17). “Hence followed a scarcity of money, a great shock being given to all credit, the current coin too.” This was of course followed by deflation of the sort we are seeing now in housing — “a fall of prices, and the deeper a man was in debt, the more reluctantly did he part with his property, and many were utterly ruined.” This is what business nowadays terms “distressed sales.”
The Roman equivalent of the Fed then pumped tons of money into the financial system, and also cut interest rates to zero, which is about where we are now in our own mess. As Tacitus puts it:
The destruction of private wealth precipitated the fall of rank and reputation, till at last the emperor interposed his aid by distributing throughout the banks a hundred million sesterces, and allowing freedom to borrow without interest for three years, provided the borrower gave security to the State in land to double the amount. Credit was thus restored, and gradually private lenders were found.”
Tiberius also raised funds by accusing Sextus Marius, the richest man in Spain, of incest — almost certainly a trumped-up charge — and then having him thrown headlong from the Tarpeian Rock (see below), a cliff at the edge of Rome’s Capitoline Hill. “Tiberius kept his gold mines for himself,” Tacitus notes. It makes me think that Wall Street is getting off easy.
Should Barnabas Francus hold the next hearing of his House banking committee atop this cliff?
Perhaps a few bankers need to fall on their swords, figuratively, but literally would be better.
They’re not only history’s worst economic criminals but childish, politically incompetent ones.
Their “politics” are nothing but the brute force of money. That’s why corporatism has systematically sought to eradicate all real politics and replace it with a pseudo-political space where money dictates, where money-might makes right. The rogue “supreme” court with the Citizens United case, and the current attempt to quash net neutrality, are meant to be the final nails in the coffin of already-comatose democracy.
It’s funny how the criminals keep repeating versions of the “adults” line and the “emotional populist” line. (Has some professional told them to do that? If so, I think he’s incompetent. I doubt Luntz would advise these as “words that work”.)
Of course, nothing could be more shrill and emotional and childish than the tantrums these criminals keep throwing. And nothing could be more irresponsible than their dead-ender hunker-in-the-bunker fight against even the slightest, most meager “reform”.
And nothing could be more criminal than the daily millions they keep stealing.
It will take a continued show of resolve to penetrate the orthodoxy’s defenses.
I also wish we’d resolve to stop being so soft on those among the non-rich who, out of terminal brainwashing or treasonous identification with the enemy, take it upon themselves to propagate (free of charge!) lies like the ones detailed in this piece.
According to comment threads I’ve seen regarding the oil explosion, there are even those who claim to have lost relatives to the crimes of the corporations yet who see their duty as to publicly defend the murderers of their own families! We saw some of that with Massey as well. It’s repulsive. Such people would clearly commit murder themselves if ordered to. We should always think of that first wherever we encounter them.
Excellent sharp comments as always:
“Of course, nothing could be more shrill and emotional and childish than the tantrums these criminals keep throwing. And nothing could be more irresponsible than their dead-ender hunker-in-the-bunker fight against even the slightest, most meager “reform”.”
Yves caught that same whiff of desperation in the transparent flimsiness of their intellectual footing, the scent of fear born of some residue of conscience perhaps. After all of this, why is there still so little evidence of enlightened self-interest rising within the citadel, no FDR to save capitalism from itself. The predators have gone psycho and intend to slaughter the last of the prey. It gives rise to dark thoughts of a conspiracy.
Going back to the FT article by David Rothkopf, I found the following particularly poignant: “Auditors opening the books of the Federal Reserve? Has anyone thought of the consequences?” In maintaining the status quo, transparency is the greatest evil…
Immelt’s “act like adults.” – Huh? Adults take responsibility for the consequences of their actions. I don’t see any bloated-bonus Banker trying to take care of the millions of desperately unemployed.
Yves, you do a great job of rallying us to the barricades. But while we fight at this level, I worry about the whole thing being dragged down to a shouting match – which isn’t going to get the results needed.
That is what happened when Levin challenged Blankfein on the issue of whether or not Goldman should have disclosed that Paulson was on the short side of the ABACUS deal. From Levin’s perspective, doing so was a necessary part of trading with integrity, whereas from Blankfein’s point of view, the very nature of a synthetic CDO would always require someone on the short side, so it is obvious.
The Levin-Blankfein bit went nowhere.
The core issue is what is acceptable and what is not. And this gets back to the roots of civilized behaviour. By way of illustration, Krugman had a snippet on his blog a few days ago, about “the way we were”.
I think what we are really seeing is a failure of social responsibility. And, while we do not have a common understanding of what that is about, face-off’s like Levin-Blankfein will not produce any resolution.
Blankfein was being completely disingenuous re the short side argument, and sadly no one has penetrated it.
It can ALSO be from a HEDGER, someone who is net long OR a dealer who has taken long positions to meet demand from CDS shorts (which again can be hedgers, and historically HAD been primarily hedgers) and wants to flatten his position. Historically, the Abacus program (remember, it was 25 CDOS in total, starting in 2004) was to flatten Goldman’s CDS book (the notes to the Senate testimony show that), not to facilitate net short positions (by Goldman or others like Paulson).
The abuse of the language is just the fog of war…
We need to reread Orwell’s “Politics and the English Language”.
As Napoleon shrewdly observed “God always fights on the side with best artillery.” In politics propaganda plays the role of artillery.
It went nowhere because Blankfein cannot (or doesn’t want to) understand what’s really at stake here.
Simply put, this is a battle for the heart and soul of American capitalism as The People see it. Alas, the elites refuse to get it.
I will let this most excellent post from The Epicurian Dealmaker delve into the topic: [emphasis and text in brackets are mine)
I strongly believe the above is mightily important: If the ethos of the aristocracy wins, this country is guaranteed to become a has-been. It is just not possible to lead by innovation in a rigged environment.
It’s that simple.
Oh…snap!
I forgot to provide the link to TED’s post:
http://epicureandealmaker.blogspot.com/2010/04/american-baby.htm
Thank you for a great, penetrating, post and your emphasis.
TED is right about the anger; rightly-tempered anger leverages reason and gives thrust to social revolution. But is this the same TED who raked Yves’ over the coals for counterproductive anger? If you’re not angry, you’re not paying attention or suffer diminished capacity. Welcome aboard, TED!
There’s always the lottery if you want fairness.
Lottery?
We can do better than that, can’t we?
We won’t have reached bottom and started back up until the people who created the mess have been moved aside.
I have a theory that the main thing protecting them is actually the sheer magnitude of what they have done. If a little bit of reform was enough, people would be clamoring for it already, but I think many people instinctively understand that a deep housecleaning is required, deep reform actually. And they don’t see how that is to be done or by whom. So familiar kleptocracy, or looking the other way about it, or just turning away in despair, seems preferable to tackling what has to be tackled.
If this theory is correct, probably things stumble on until there is another sharp downturn and people see that the status quo is so bad that any replacement has to be better.
Actually, what’s protecting them is owning all aspects of the law.
Most judges are republican reptiles, who believe the meaning of the law is to protect property. And of course, the more property, the more protection. The Congress will, of course, make no law that disturbs their customers. You can buy a lot of Congress for very little money. And the president is still the nation’s ultimate law enforcement officer. Our current president is unashamed of being an employee of the very people breaking the law.
I assume one of the many Bush policies our current president is continuing is ending any investigation into financial crime that threatens the current elite. Maybe a few small fish get caught, but nobody who signs his real paycheck.
Hey Jeff Immelt,
If your saavy businessman friends had “acted like adults” instead of ripping down every sane bulwark against looting and predation that they could get their grimy little fists around we wouldn’t be in the shape we’re in would we?
And also ask yourself why any high level executive of Any Public Corporation Anywhere should loot the shareholders for the kind of income you and your cronies regularly do as compensation for navigating meetings and engaging in knife in the back politics like debauched Roman aristocrats while middle class families who do real work financially die, one by one? It’s another symptom of a deeply psychopathic system, one that you are aligning yourself with and defending.
Please Mr. Immelt, start thinking like “an adult”. It’s not too late, hopefully. If you really listen you’d hear that people aren’t “damning Wall Street”. They are damning the way Wall Street goes about it’s business. There’s a difference there. You’re smart enough to see it.
It is infuriating. Being lectured at by self-serving, lying liars and hypocrites.
Yes, Buffet; you are a hypocrite. The sheep are asleep in the field, while the sheperd fleecing the flock.
I can’t even look at Greenspan without seeing Burt from that old show, Soap, snapping his fingers, making himself invisible. How can it pertain to me? I’m not even here.
Rumsfeld, Cheney… is there any doubt that these people suck, and the world is worse with them in it?
And they can never resist the urge to school us.
/End Rant
/Begin Action
Let GS = 0;
Keep up the good work, Yves. Laying out the subtle spin in this kind of argument for the rest of us makes it easier for us to have some talking points when we’re trying to figure out why this stuff is wrong. I mean, I instinctively understand when reading it that it is propaganda, but I have a hard time explaining it to someone else. This helps.
Thanks.
****Notice that arguments one and two are contradictory. The first presupposes that not much more in the way of regulation/oversight is in order (otherwise, those horrid populists might have a legitimate axe to grind) while the second is a tacit admission that tougher rules are needed, but endeavors to shift the blame away from the industry and on to regulators, and more recently, Congress. And ironically, the argument then becomes, “well they botched it, didn’t they, so it’s silly to let them have a second go at it.” That’s simply disingenuous. “Congress” is not static; its membership turns over, its party weights change, its posture adapts to changed moods and conditions. Similarly, the people in regulatory agencies change over time, and they can be emboldened or neutered by their leaders.*****
Please, for the love of God, stop.
Just stop with this line of reasoning, which is non-sense in it’s highest form.
There are no guarantees in investing. Every investment comes with a disclaimer.
Except those backed by the Government.
Do you understand now?
There are guarantees in the wonderful wall street casino: if you aren’t in the “in-group” you WILL LOSE.
I wretched when I read your comment. How much did it take for you to turn into an apologist for the status quo?
Nobody is looking for guarantees.
If I had a habit of running over your family members with my car, you’d want me off the road as a hazzard. Likewise, we don’t like that legislation is being bought by the same people who did the latest hit and run on us.
How many screwups does it take? Are you incapable of learning? Are you a retard?
“There are no guarantees in investing. Every investment comes with a disclaimer.”
No guarantees of honesty, of reasonable leverage ratios, of impartial rating agencies, of adequate reserves for insurnace policies, of limits on usury, of transparency and firewalls against insider trading,…? Really? “For the loove of God”?
So henceforth, the disclaimers must include that your broker will routinely lie to you, will shut you out of trades during crisis while they engage HFT trading, will design stuff to fail and sell it to you so they can collect on your failure, will routinely engage in front-running and insider trading; will deliberately design deals to detour regulations…
If indelicate, Ackermann’s questions are quite appropriate.
Rothkopt: “A boot on the throat is no way to do business.” This quote has a deeper level to it which is indicative both of the corpocracy’s strategy of the last thirty years and why the’re sweating under their collars just now. The corporate vehicles of individuals of great wealth, and their related propaganda institutes and captive mass media organs have been very successful in promoting the (ideological but never so stated) view that a function of government is ‘to do business.’ That governments should, promote business, talk to business, facilitate business, and operate like business; in its strong form, this ideology would suppose that this is the ONLY legitimate function of government, and where it cannot or will not ‘do business’ it should not exist at all. This view has completely saturated the major media to the point that no viewpoint not compatible with it is given any airing except for a few distorted seconds before the canned derision is cued. When the Nude Democrats and the Nude Labor in the US and the UK, and even the SPD in DEU all capitulated grovelingly to spout this cant in the 1990s and since, any political opposition to it vanished from the discourse. If political parties wouldn’t ‘do business,’ they were at best obstructionist, and at worst anti-Western. Yes, yes: it took the casuistry of neo-liberalism to put the ‘do business’ ethos into a form saleable to the mass bases of those political parties, but the effect was the same. And so certainly over the last twenty years, folks part of the Top Wealth Club to which guys like Immelt belong and Rothkopt toady became very confident in, very adapted to a discourse where only those who ‘did business’ counted, indeed only they were allowed to speak.
In the (formerly, nominally) liberal democracies the most of us reside in though, we’ve been indoctrinated otherwise. Ours is the impression that the function of government is to promote stability and justice. Those of us on the left have the view that a further function is to promote social justice—equality, more or less—and the suitability and sustainability of our physical environments. None of these things have anything much to do with ‘doing business.’ Indeed, doing business has a long, _proven_ record of being INIMICAL to all of those functions most of us actually believe government should perform . . . if it is government for us, the populace; not government for them, the wealthy few and government _of_ us the populace by the wealthy few. The disconnect, indeed the antipathy, between these two perspectives has been badly papered over through the last twenty years. Partly because the media simply, and blatantaly sold out the populace and mouthed the cant of the wealthy, putting a dollar’s ass kissing spin on anything and everything so that ‘doing business’ seemed right, natural, and above all profitable for the mass of the populace when anything but has in fact been true. Asset price speculation, pumped out and up by the wealthy did in fact deliver the opportunity for gain to much of the middle class in these same liberal democracties although the working classes were largely left out and progressively impoverished by the suppression of wage increases and the inflation of prices generally. But hey, the middle class has never been loathe to throw the lower class under the bus on the road to prosperity, so for twenty years the wealthy few have been able to sell the comfortable middle on the notion that government should ‘do business.’
Now, those asset price gains have proved to be illusory, but the debt levels that went with them have _not_ been expunged for the no longer comfortable middle. And that is a real problem for the Wealthy Few. Not because they are no longer comfortable and wealthy themselves but because the Big Lie that government should do business is right there in black and white billing statements before the formerly comfortable middle. And the votes are shifting on what government should do. Shifting where, nobody is any too clear, but out from under the cant of ‘doing business.’ And it is very clear that Big Wealth and their corporate vehicles don’t have a New Selling Campaign thought up yet, so they just keep repeating the old shibboleths though the same gaseous media blowholes about how the government has to ‘do business’ because that is good ‘for the economy.’ Economy of whom, one might ask, and that is exactly the question that Big Money is sweating some are starting to ask themselves. Many, not just clownish tea potters, and demanding that government STOP DOING BUSINESS AND START DOING GOVERNING AND _JUSTICE_. And that is very much not according the the script of Great Wealth. The government has the power to crush the corpocracy and Great Wealth, but not the will nor the willing at the top. If Great Wealth and its lickspittles lose their lock on the discourse, though, all bets are off on the replacements, pending, of those now in power. That is what is so dangerous—for them, not us—about folks talking about something other than ‘doing business,’ about folks talking about doing governing. Because governing for the populace and doing business for the wealthy are fundamentally opposed options in any _functioning_ liberal democracy. So those of Great Wealth want at all costs to continue the dysfunctional, one-party, pro-corporate political system we have now and this ideological flatulance about ‘doing business for the good of the economy.’
—So don’t let them: Speak your mind, vote your conscience, don’t shake the hand of the corporate profiteer or financial speculator. Spit in it if you can get close enough to do so.
Again, just stop.
The bust following this boom looks surprisingly like the bust following every other boom, every other time, all the way back to the time when man first started using currency in place of goods as a means of trade.
Precisely because men are involved, and until the genome changes dramatically, we remain a deeply flawed (in a Hobbseian kind of way) group of individuals.
So stop with the ‘we on the left want social justice’ bullshit. It isn’t going to happen, now, or ever. Not through the implementation of more government.
What happened here, as opposed to some other crashes in the past (not all, just some) is that the financial institutions correctly surmised that they were playing with the house money; yours and mine.
Remove those guarantees and guess what? You’ll still have booms and busts. Folks will still lose money, go bk, be financially destroyed. All the way out until the asteroid takes us all out.
The difference will be that you and I won’t be paying the price, as long as we didn’t take part in the ‘investment strategy du jour’.
Of course, since the left is so interested in fairness, there will be committee hearings, a parade of ne’er do wells exposed as financial miscreants, and a whole slew of legislation designed to ‘safe guard the future of our country’.
Pure bullshit.
100% right. Americans are not smart enough to wake up. Ever.
Were we the only culturally and politically organized society to have ever suffered a boom and bust, then yes, you would be right.
The point is that talking left or right, or talking about making the system less prone to financial failure is not only futile, but stupid.
It’s always happened, it will always happen, and the only ones who get protected by the legislation are those who have access to the legislature.
And that legislation always takes the form of ‘helping the little guy’. Arrgh.
Invest all you want. Take as much risk as you desire. But get the government out of the business of making good on other peoples bad bets. If you want security, then buy government bonds, protected by a monetary and fiscal policy that insures their safety.
Other then that, if you like tulips, go for it.
Corruption rules. Long live corruption!
kstills:
you argument is poorly developed and incredibly naive.
1)
You make the clearly erroneous assumption that what is going on now is simply human nature, something that’s happened since time began. But this is clearly not the case.
You subvert the word “fairness” to some childish fantasy. But it is not.
for instance: after the Depression the people got together and thought about what was “fair” and changed some rules. And we saw a marked reduction in boom/bust cyclicity. we also saw clear changes in wealth distribution.
Starting in the 70s/80s, other people got together and made some other decisions about what was “fair” and changed the rules again. We saw an extreme amount of boom/bust since that time, and the boom/busts are happening faster and faster.
Therefore: I see no reason why “people” (govt, business, plebes) can’t get together and decide “what’s fair” again and start changing the rules accordingly, with a resultant change of our future.
will it be perfect? of course not. but that doesn’t mean we should just sit here and do nothing. it also shows that govt/people are not completely ineffective.
======
Remove those guarantees and guess what? You’ll still have booms and busts. Folks will still lose money, go bk, be financially destroyed. All the way out until the asteroid takes us all out. The difference will be that you and I won’t be paying the price, as long as we didn’t take part in the ‘investment strategy du jour’.
Rather simplistic don’t you think? We’ve all been paying the price EVEN BEFORE the bailouts, because our entire world is interconnected.
Where are you going to go so that you don’t pay the price????
Simply removing the guarantees isn’t going to be enough. Sure, it’ll reduce our costs on the backside since there will be no cost of bailout… but YOU are still going to be affected while the Masters of the Universe play their games.
Let’s pretend we took your path. we removed all guarantees (and meant it).
well… first of all nobody would believe it. so all the big businesses would get bigger and bigger… and continue speculating here and there. And then they’d drive food and energy prices to the moon for a while (how you gonna get away from “paying that price”?).
eventually, as you say, everything would crash spectacularly. As stated above, we would be serious about our no-guarantee proposition… so our economy would halt and this would cause major food/energy/resource distribution problems (how would you acquire your material needs in such a busted economy?)
the problem is you live in a dream world where all we have to do is make our own decisions and let everybody else make theirs… and nobody affects anybody else. grow up, that’s not life.
I’m sorry, but for the most part I DIDN’T play “their” games… and I still had to pay for $135 oil and rapid increase in commodity prices and rapid increase in housing prices and so on.
and if/when they blow up the world economy then I’ll be the one trying to find a way to get food….
Your way only works if we all can live in relatively closed completely self-sufficient environments…
or perhaps that’s what you mean? we need to go back to the way of living of the 1800s?
even that won’t work… look at what happens to the aboriginal peoples around the world. They certainly aren’t playing the Western world’s game… look how well that turns out for them as we deforest their homes and push them into refugee camps.
but that doesn’t mean we should just sit here and do nothing. it also shows that govt/people are not completely ineffective.
When the Sun becomes a red giant in 5 billion years, you will realize how futile it all was!
http://en.wikipedia.org/wiki/Red_giant#The_Sun_as_a_red_giant
Yearning to Learn,
Yep.
kstills is making the same old hackneyed New Atheist/Richard Dawkins argument we’ve heard ad infinitum for the past 30 years: If we can’t sell people on the idea that “greed is good,” then at least we can convince them it’s “inevitable” and “just natural.” That way it becomes immutable and unchangeable, and therefore defensible.
Ah, the sad refrain of a trust baby:
Stop! In the name of greed.
Before you break my trust.
Leaving me broke and hurt.
After I’ve been good to you?
After I’ve been sweet to you?
Stop! In the name of greed.
Before you break my trust.
Is your piddling IRA
Worth more than my love and affection?
But before you leave my arms
And rush to government.
(Think it over) Haven’t I been good to you?
(Think it over) Haven’t I been sweet to you?
So what you are saying is if you are being ass-raped, just take it because fighting won’t change anything.
Where do you live?
You know… for when the urge hits me.
Kstills, Aha! I think I get what you are saying.
People are flawed. Nothing we can do will change that. There will always be robbers and crooks, no matter what we do. Trying to impede them will not eliminate them, therefore we should just stop making laws and disband the police forces. Accept the inevitable and embrace it.
Pure bullshit, indeed.
Hear! Hear!
This post is myopic and it’s a demonstration of an Out-Group Homogeneity Bias.
With exceptions, the anger of the Left and of the Right are expressed through “Progressives” and “Tea-Partiers”, respectively.
Take Yves’ paragraph that reads:
“But let’s return to the “populism” attack, which sticks in my craw. It’s a not-very-subtle way of denying the legitimacy of the populace’s anger. The taxpayers have just been the victims of the greatest looting of the public purse, and the perps have the nerve to lecture them about their anger?”
Simply substitute “populism” with “tea party” and you have the exact same phenomenon.
Just as the Left (and Progressives) marginalized the Tea-Party anger (which, overlaps Progressive anger in so many ways), the Right–and Tea-Partiers–are marginalizing the Progressives.
In the end, all of us in the middle, lose as a result.
But, Yves is playing the role of the hypocrite by claiming that this type of marginalization (against her group)…”well that’s just is not fair.”
Yet, Yves has absolutely no problem when the Tea-Partiers are mischaracterized. The reason for this is Yves’ susceptibility to the Out-Group Homogeneity Bias, referenced earlier.
Accordingly, her “in-group” (ie Progressives) is varied and diverse, thus the imposition of simplistic stereotypes is unfair. But the out-group (Tea-Partiers)…well they are seen as homogeneous, and thus any simplistic characterization is warranted.
It’s a worldview expressed by teenagers as they experience cliques for the first time. And it’s reinforced by a susceptibility to Confirmations Biases.
Until the Progressives and Tea-Partiers work together to end the cronyism between our government and our Ultra-rich Financial Class, each respective movement will be systematically marginalized. If you are a Progressive and you smile with satisfaction when Tea-Partiers are characterized as “racists”, you’re only setting your own movement back. And if you are a Tea-Partier and you smile with satisfaction when Progressives are characterized as “Hugo Chavez loving miscreants”…you’re also hurting your own cause.
There will be ample time for Progressives and Tea-Partiers to fight over policy in the future, but they will never reach that point until BOTH the government and the financial class are put in their place.
Dan, I’m confused…
although I agree that there is often too much arguing between fictitious “left” and “right” factions, and also that the powers that be use that dumb fighting to stall meaningful change for the typical American… that has nothing to do with this post.
Yves used the words “anger of the populace”.
This might surprise you: but the populace actually consists of the Progressives, the Tea Partiers, and everybody else!
It seems that you have an axe to grind that has nothing to do with this post…
Specifically, you twisted Yves word “populace” into “progressive” (I’m still not sure how you came to that conclusion) and then set up the progressive/tea party dichotomy.
on a side note: I’m not saying that Yves hasn’t disparaged a Tea Partier in the past… only that this has nothing to do with this post.
Please…everything Yves wrote in this post echoes the Leftist/Progressive party-line. To state otherwise is equivocating at best, sophistry at worst.
There is no way that Yves wrote this post whilst including Libertarians in with her marginalized “Populists”. You know it and I know it.
Dan Duncan,
I disagree with your framing of the issue.
You put Yves on the left, yourself in the middle, and the Tea Partiers on the right.
I, on the other hand, put Yves in the middle, you on the far right, and the Tea Party Express (as distinct from the Tea Party Patriots) on the extreme far right. And in America there is no left.
The Tea Party Express is an astroturf organization—-a mouthpiece for the rich and powerful, and not a very transparent one at that.
To lump Yves in with some Marxist ideologue like Hugo Chavez is as laughable as you characterizing yourself as being a member of “us in the middle.”
What is meant by the appellations left and right, liberal and conservative? About fifty years ago I stopped trying to apply those little beauties. My conclusion then and now is that neither is beneficial and contributory to society. Each operates to achieve economic advantage to the detriment of all others.
It is not at all surprising that the fraudsters are fighting back with their propaganda. This blog, and others like it, are a direct threat to that which is the rice bowl of the fraudsters.
Why fraudsters as opposed to banksters? Are those who hold themselves forth as bankers not engaged in representing that a CDO can have a AAA rating? Is that not a fraud on its face? Please demonstrate how the concentration of the probability for default can lead to the mitigation of risk.
Similarly, the call for transparency falls short of what is required. Without the enforcement of contracts, transparency is irrelevant. Now just where and when did we reject the enforcement of contracts unnecessary?
It begins with the fraudsters inducing the legislature to repeal or ban regulations. It begins with some cockamamie idealogue who holds a position of considerable economic regulatory power positing that markets are efficient and that the prosecution of financial fraud is unnecessary because the market in its infinte efficiency will correct and thereby prevent fraud.
I believe that we can ban the CDS outright. I believe that we can ban the CDO outright. Will such action cause some pain? Considerably more than a little, in fact a mild depression is quite probable. Isn’t a depression something that we should avoid? Not if you want to have a sustainable economy because we will have to create positive incentives that reward honesty and fair dealing. Implicit in that is the necessity of a currency that maintains its purchsing power over generations as opposed to devalued fiat dollar that we now employ.
As things are now, it appears to me that whether right or left, liberal or conservative or any other name, no one is willing to bear the cost of what has to occur if we are to achieve a sustainable economy. So long as that fact holds, we are a tower of Babel talking past each other. Our media are filled with sound and fury that accomplishing nothing. (Sorry Will).
The liberal and conservative labels have been devalued by being applied to questions other than economics. The “lifestyle” issues, the “religious” issues, even the “artistic” issues get labeled liberal vs conservative. In time, they replaced the economic questions in the MSM.
Part of this was deliberate destruction of the New Deal political blocs. Choosing out hot button issues like abortion and homosexuality to break down mainline Protestant denominations spread to the larger society and was able to break down the political blocs. Civil rights didn’t help, and the leadership – masses split on national defense just gave other flash points for the hate talkers to exploit. While the rest of us were being thrown around in the war on drugs, the economic far right wing just quietly took over the center of attention.
So the question is, now that we’re divided, can be become unconquered? Hard to say. But the right wing screamers will still be running back to
Their transpareny is a function of IQ.
They are very successful at recruiting the monumentally stupid and the cream of the willfully ignorant crop. They will never be found out.
No $4 eduktion. I don’t ned it.
Ah, Downsouth…
What, no Hannah Arrendt? It is always fun to watch DownSouth “employ” logic and critical thinking on his own, without quoting some interminable passage from “On Revolution”.
Only…
When you do attempt to present an idea on your own, DownSouth, you remind me of a Trekkie Mr. Spock. Not the “real” Mr. Spock, mind you; the one from Planet Vulcan who employs rigorous logic and exhorts others to “live long and to prosper”.
No…the Trekkie version of Mr Spock…
The one who makes monthly visits to The Intergalactic Uniform Store to pick up the latest model tri-corders, phasers and the most “authentic looking Vulcan ears in the Milky Way”.
I’m not doing it justice. Here…
Think Yves as William Shatner and DownSouth as John Lovitz in the following SNL “Get a Life” episode:
http://s263.photobucket.com/albums/ii137/Alembic-/Videos/?action=view¤t=SNL-WilliamShatner-GetALife.flv
Dan Duncan,
Wow! Did we wake up on the wrong side of the bed this morning? Where did all that flowery talk about getting along with the progressives disappear to?
So let’s play dueling videos here. If you see me as being like John Lovitz on the Get a Life episode, then I see you as being like Glenn Beck, who, like yourself, is also a staunch ally and defender of the Tea Patiers. Here’s a couple of videos with Dan Duncan, oh, excuse me, Glenn Beck in action:
http://www.huffingtonpost.com/2009/09/15/jon-stewart-returns-slams_n_286906.html
http://www.youtube.com/watch?v=-KOQLu32Ztk&feature=player_embedded#!
The difference is that the character Lovitz plays is fictiononal.
You and Glenn Beck, on the other hand, are for real.
And that is really, really scary.
Yep…they disguise them selves as upstanding citizens, when in reality its quasi-religious racism.
Skippy…it amazes me, how faux news repackages its message so childishly, yet people eat it up…sigh.
Dan, you’re dragging emotional baggage into a discussion where it is not even relevant. You seem to be stuck on some old perceived slight on tea-baggers and left-right dichotomy when nothing of the sort was even remotely present in Yves’ post. Thus, you come off as an incoherent drama-conflict addict, pulling out old arguments to get your adrenaline fix and try to settle old scores that have little to do with current reality. I suggest you take it to your local bar.
What is it today? Is it free Koolaid and Twinkies day?
You chose to not read the actual words, but rather to interpret them using your own syllibus.
There’s a verse from a Metallica song that applies here:
Hearing what you want to hear
Knowing only what you heard
If I frisked you, I’d find smoke, mirrors, a prism, beer goggles, a straw man, and a red herring.
The attacks on critics of our current system are just ad hominem attacks buttressed by appeals to authority. Repeal the Federal Reserve Act and end the looting.
There is something Jim. I don’t think it can be called a political framework, because it is not yet defined. In an ideal situation the only function of a government should be the defence of the rights of each voting citizen.
This doesn’t happen:
In my view and that of increasing numbers, is that governments and politics are essentially evil (read- not in our best interest). Political suggests an personal adgenda. What we need is a species adgenda. By leaving the bulk of the national and global populace constantly disadvantaged and disenfranchised, we are wasting the greatest resource on earth. The “dog in a manger/screw you Jack..” mindsets are very naive. They presupose entitlements not based on merit but on a lack of scruples, and a willingness to endorse the party line.
There is something Jim. I don’t think it can be called a political framework, because it is not yet defined. Perhaps it can be called ‘people power’ though that has already been overused and perverted. In an ideal situation the only function of a government should be the defence of the rights of each voting citizen.
This doesn’t happen:
In my view and that of increasing numbers, is that governments and politics are essentially evil (read- not in our best interest). Political suggests an personal adgenda. What we need is a species adgenda. By leaving the bulk of the national and global populace constantly disadvantaged and disenfranchised, we are wasting the greatest resource on earth. The “dog in a manger/screw you Jack..” mindsets are very naive. They presupose entitlements not based on merit but on a lack of scruples, and a willingness to endorse the party line.
A major problem of the so-called “left” is that it does not have a political theory. It seems imperative that it rethink the political framework of the U.S.
Is there a left critique of the State?
For example, when Richard Kline writes “Ours is the impression that the function of government is to promote stability and justice and the sustainability of our physical environments,”– what type of political architecture would support your values?
When you look at American history one could argue that by advocating increased federal regulation of the economy (as the Progessives and New Dealers did) they managed to fulfill the letter of populist demands for state protection of their economic interests threatened by unscrupulous banking interests–but not their democratic spirit.
Instead we have had a greater and greater centralization of political and economic power and an increasing disempowered citizen. Is there a political framework that would help to get us out of this dynamic?
Instead we have had a greater and greater centralization of political and economic power and an increasing disempowered citizen. Is there a political framework that would help to get us out of this dynamic?
In the face of both centralized kleptocratic tyranny and the unsustainable debt zombie AKA the global economy, which is really just a Tower of Babel; in the face of the structure comprising these two elements, the only framework that can survive beyond the collapse and perhaps offer some preparation, protection, and spiritual comfort in the meantime is relocalization. Politically, socially, culturally, economically. As much as possible.
It won’t be easy for most to accept that big corporations, centralized government, and consumerism have long been socially and politically malevolent and are now economically unsustainable, that in the short run we can expect only assaults from the top down, and in the long run there’s no future there at all, but this is going to happen anyway, one way or another.
It would be much better for us if as much as possible we now detached from the kleptocracy, by becoming as self-reliant and self-sustaining as possible, as individuals and as communities. So we should focus our positive economic and political efforts at that level.
But from the top down we can expect nothing but incompetence and disaster at best, and fascism at worst, and probably some combination of the two, so any political focus there should be negative, for example fighting further assaults on civil liberties.
Libertarians, de-regulators, and Republicans are attempting to “disown” the past 30 years of decreasing regulation and increasing scandal. Effectively, we “didn’t deregulate enough” or “do it right”.
It’s true. And they mean well. But, I’m no longer willing to take more chances with the whole approach. I’ve lost faith that it can be implemented without being accompanied by rampant fraud or by further screwing the bottom 80%.
From jbmoore’s post>>
It all began when Emperor Tiberius enforced a ceiling on interest rates, which caused a severe credit crunch, Tacitus relates in The Annals (book VI, 16-17). “Hence followed a scarcity of money, a great shock being given to all credit, the current coin too.” This was of course followed by deflation of the sort we are seeing now in housing — “a fall of prices, and the deeper a man was in debt, the more reluctantly did he part with his property, and many were utterly ruined.” This is what business nowadays terms “distressed sales.”
I was thoroughly disgusted when one of President Obama’s first statements was in support of American families keeping their homes, even if this imposed a long term crippling debt on them.
The conservative mania for maintaining the status quo merely insures that nothing will improve.
I liken society to a row of dominos falling backwards. Everyone keeps their eyes firmly forward. Willing to sacrifice any principle to achieve a single position advancement in the row, while being constantly aware of the thunder from behind.
In everything, even our failures we attempt to return to the same roots, thus ensuring that the renewals are doomed to repeat the cycle.
What is the point of having these costly and destructive cycles. We are so unwilling to entertain new possibilities that we are stuck in a classic abuse cycle (look that up if you don’t understand). Humankind must find a way to evolve. We must break the cycle. Otherwise our species really is doomed.
I don’t think Americans are asleep or dumb. They just don’t think they have an ability to change things. But we look to be close to a crisis of governability, even despite the election of our-savior-Obama. People understand that there is a straight line from the corruption on Wall Street to that at BP.
Yves, your ability to understand the inner working of the financial system and generate a worthwhile opinion regarding the various players continues to impress! The search to reduce risk in modern life while generating higher complexity is curious as the choices continue to expand into greater chaos!
Great Post Yves!
Truth to power – because the powerful are selfish, arrogant, and clueless.
Wunsacon
Certainly a more and more centralized state has disempowered its citizens as much as an unregulated market.
Don’t both parts of the equation–market and state–have to be reformed.
Unfortunately our political dialogue is obsessed with the supposed confrontation between maket and state which only obscures the need for dramatic reform in both realms.
To me, populism, if real, is a crisis in political representation and must be dealt with on an economic, political and cultural level.
Culturally the market has reduced citizens to consumers and the state often reduces citizen to state-dependent personalities.
The result, from both the present configuration of the market and the state, is a citizenry unable to function without the administration and guidance of mangerial agencies in both the public and private sectors.
Because of a passive citizenry this professional managerial class becomes more and more unaccountable and more and more corrupt.
Doesn’t this cycle have to be broken somehow?
Agree that there is an emerging crisis in representation, and to me it appears both in markets and in politics.
The US Constitutional framework was created over 200 years ago at a time when the population was a small portion of what it is today; the concept that 2 California senators are supposed to represent over 30,000,000 citizens is preposterous. You can do the math for state populations and it becomes increasingly apparent that the wildly disproportionate populations of states are creating a huge crisis in governance — most apparent in the US Senate, but also quite obvious in California.
IMVHO, most people simply can’t deal with the amount of complexity in today’s world; nevertheless, it’s apparent that the very people who used ‘complexity’ to make fortunes with derivatives are now wailing that Congress ‘doesn’t understand banking’.
No, duh?
And why should Congress understand banking?
Presumably, so that it can keep an eye on the banking sector.
Congress as currently comprised does not seem capable of saying publicly:
1. If it’s too complicated for you bankers to explain to us, we’ll outlaw it.
2. If it’s too complicated for us to regulate reasonably, we’ll outlaw it.
3. If you want to act like a pack of crybaby whiners, we’ll raise your tax rates.
4. If you bankers can’t clearly and repeatedly show us how ‘Wall Street’ helps ‘Main Street’, then we’ll place your legislation in a new category called ‘OffshoreSwapsAndGambling’, and spin that whole topic off to a few new committees, which we will then staff with adults who have the patience to deal with you preening, narcissistic, overpaid whiners.
5. We’ll keep ‘Main Street and Community Banking’ under the Banking Committees, which should give us at least a prayer in hell of accomplishing something meaningful.
And because Congress won’t outlaw things too complicated for it to understand, it makes the whole systems of governance and markets ever more fragile. It’s already too small and futile an organization to oversee the size of the US economy, let alone a nation of 300,000,000.
Letting itself be bamboolzed by banksters wailing about how it’s all the fault of Congress because they can’t fathom the shadow banking system, hedge funds, and derivatives, it just one more symptom of a system coming apart at the seams.
Emmelt and his cohorts forget who they rely on for their wealth; over the long haul, it’s taxpayers.
And as Yves rightly points out, taxpayers (a class of primates) are probably willing to take some losses in the short term in order to punish cheaters. I think that’s probably where we are now.
The best scenario going forward is that the current system proves to be so untrustworthy to so many that the money starts moving to simpler, more accountable operations. Quite how or when that happens, I don’t know. But it’s the best outcome that I can fathom.
There are others that are more…. Grecian…
I think Dan has it right.
Somewhere along the way Americans have become confused about who is on whose side and I doubt that it is a coincidence that the working-class in this country has remained divided. Racism seems to be a key dividing factor although there are some aspects of this issue that don’t quite make sense. Blacks for example voted almost exclusively along racial lines in this past presidential election yet Whites are once again the race being accused of being prejudicial. Think of what the outcry might have been had 95% of Whites voted for McCain in this past election and that should give some basis for understanding which race has made some progress regarding racial bias and which race has not, and yet it is almost always ‘some’ Whites who are labeled as ‘racists’. And of course it is nearly always the so-called ‘progressives’ doing the name-calling.
I grew-up in East-LA and learned at a very young age that there were certain Hispanic neighborhoods that were too dangerous to walk through for a White kid. As I got a little older and started to drive I also learned that there were certain neighborhoods that were almost exclusively inhabited by blacks and these were dangerous places just to drive through, and ‘forget about’ getting out of your car. As a matter of fact I learned these lessons the ‘hard way’ as did any adventurous white kid who lived in one of the poor parts of Southern California.
What seems too often overlooked is that poor Whites rarely have their own ‘turf’. The areas where I lived in LA, and where I live now in Texas, have a great many poor, working-class Whites, but they live in neighborhoods that are racially mixed and comparatively, as compared to the Black and Hispanic enclaves aforementioned, these areas are much less prone to racially motivated clashes between groups, or between individuals.
What the so-called ‘progressives’ are doing when they accuse the ‘tea-party’ folks of being racially motivated is what demagogues always do, they generalize, stereotype, distort by exaggerating and by excluding etc., and everyone sees this all around us so I won’t elaborate. What is worth saying though is that there is an easy way to distinguish the actual progressive thinkers from the pretenders: genuine progressives, those who care deeply about ‘progress’, they understand that a divided working-class is what allows the balance of power to remain in the grasp of the investment-class, and so they most certainly do not do or say anything that exacerbates the racial divide in this country. And especially not via low-integrity tactics such as generalizations, stereotyping etc., based on presumption. And of course there is no evidence that the Tea-Party folks are racially motivated yet that assumption has permeated our national discourse. So, ‘who benefits’ is the question that must be asked when the Democrats and the Republicans play their deceitful games? And there is usually a hint of ‘blind ambition’ involved regarding the messenger.
It is critical to understand also that if the working-class were to unite, one of the two political parties would be forced to accommodate and represent a voting bloc of such significant size, and our democracy might just find some balance. And as Dan suggested above, then the process of settling differences could continue but on a level playing field.
Attempter; I think the biggest challenge all people everywhere face is developing personal accountability. Until we decide that we are responsible and capable, we will allways deligate decision making to some external “Authority”. If we do not accept resposibility, how can we hold those in power to be accountable.
People think I’m crazy for using my own name on the internet. Perhaps I am, but I refuse to hide behind some vague annonymity in fear of a nonspecific threat. I’m no hero or crusader. I have a terrible phobia of crowds and am totally unable to speak before more than two people. I suppose that the faceless chatbox monitor is my form of seeking annonymity..:)
Survival is not enough! We need to grow out of the box. Withdrawing from society is a poor option, it supposes that there is no posible future which we would want to be a part of. I am ok. I will probably survive my alloted span reguardless of what happens politically or economically. For me that is a poor goal. What is the purpose of our existence on earth if we can do nothing to lay a framework to help future generations.
I didn’t say withdraw from society. I said we no longer have a society. It’s been destroyed by the elites. All that’s left is a Hobbesian free-fire zone.
So if we’re ever to have a new society, if we’re ever to redeem freedom and humanity and justice, we’ll have to do it by building new communities, from the soil up.
Please note that the Hobbesian Free-Fire zone is the ideal situation of libertarianism.
The French Bourdons have nothing on the US ruling elites, who learn less than nothing. A modest proposal: locate and seize the wealthiest US oligarchs. Shoot 10 a day until they surrender control of the government. Fellows named Paulson would be a good start.
Ray…The race predudice you speak of is a complex issue. Much of it is an atavistic trait which is part of nearly every human activity. It is found in clubs and societies, in business and industry, as well across economic and social strata. You find racism in African and Asian societies. It is an innate fear of anything different and alien. The immigrant enclaves which were formed in North America were a form of ‘racism’. These people were not restricted to certain areas. But, they felt more comfortable with familiar people and structures around them, even though they had emmigrated to escape these structures in other parts of the world.
It is largely a part of that great animal failing, ‘fear of the unknown’.
Keep at them Yves!
At first, they ignore you.
Next, they ridicule you.
Then they fight you.
Finally, you win!
Paul,
I suspect that my comment came too late in relation to Dan Duncan’s comment so here is a little of what he said:
“Until the Progressives and Tea-Partiers work together to end the cronyism between our government and our Ultra-rich Financial Class, each respective movement will be systematically marginalized. If you are a Progressive and you smile with satisfaction when Tea-Partiers are characterized as “racists”, you’re only setting your own movement back. And if you are a Tea-Partier and you smile with satisfaction when Progressives are characterized as “Hugo Chavez loving miscreants”…you’re also hurting your own cause.”
“There will be ample time for Progressives and Tea-Partiers to fight over policy in the future, but they will never reach that point until BOTH the government and the financial class are put in their place.”
—————————————–
Anyway, my comment was intended to be less about racism and more about the importance of recognizing the dynamics of division that serve the interests of the investment-class. I could have just as easily used issues such as Gun-Control or Abortion but Racism is of course more divisive historically and so I chose that issue instead. I think it may have taken me too long to post though and my attempt to add to what Dan said may have lost the benefits of well-placed timing.
Heehee..:) It’s hard to stay current in a convo like this format.
Any way, I understood what you said and mostly agree. I was just grabbing a chance to throw in my two bits. Now I better log out and get on with the real world.
There are a lot of good people and posters here. My thanks to all of you and specially to tireless prodigious Yves…Do you sleep?? lol
Yet another brilliant dissertation …
Thank You Yves …
Yves, why not reduce these arguments to the simple observation that the system lost sight of justice?
What you’re describing is a PR battle, which removes us from reality.
In logic, it looks like the tragedy of the commons – we’re all to blame because we’re selfish.
But the clearest concern is that the people needed to support the system – investors and taxpayers – are no longer in a position to distinguish right from wrong. They cannot find a foundation.
I love this post(not that I am anyone to judge) because it clearly and succintly sets up the dichotomy between corporate elites and the rest and connects that tension with libertarian ideals regarding the size of government. Elite private interests are served by small government and the hoi polloi should be skeptical of the owners of production and their intentions.
What is amazing to me is that such skepticism of private elites has existed for hundreds of years in this country. It was displayed intimately during the initial founding of this country(where private enterprise was ultimately run by a monarch), then more concretly during the early and late 20th century, which is full of examples of trust busting, workers rights movements, minimum wage laws, unionization and high taxes on high earners, corporations, and capital gains. The anomaly in mainstream socioeconomic thought has really only taken hold over the last thirty years.
I truly wonder: How could unbridled, unrestrained capitalism be allowed to take hold despite such a rich deep history of Americans fighting against such a thing? How did people of today(both young and old) become so naive to accept such principles, and so brazen to discount its effects as actual possibilities? Our history is rich with antiestablishment agendas; people fought handily for worker reforms in the 20th century, and viciously to limit the power of private elites. Unfortuantely, historical amnesia is often caused by one virus, and it is the same virus that convinced Greenspan and America’s econonmic managers that they were capable of quashing the ‘business cycle’, hubris.
People often point to the death of the Soviet Union as the turning point. Their belief is that the demise of the Soviet Union meant the deligitimizing of a discourse and philosophy from which worker rights and antiestablishment agendas arguably blossomed from: Marxism. I personally believe this to be a valid point. For some libertarian cheerleaders, the fall of the Soviet Union was confirmation of the ineffectiveness of redistributive principles(which is used to limit the power of elites), economic equality(the idea that everyone has a fair shot), and perhaps even regulation to some extent. Obviously and scientifically, the fall of the Soviet Union could be used to partially-confirm the effectivness of a free-market system versus a system of central planning. But its meaning in history perhaps got warped and overexaggerated by the libertarian cheerleaders in ways outlined above. For some, it meant not just a confirmation of the free-market, but as evidence against some humanist principles because they were confused as communist. Thus, we have today.
Excellent comments. It does indeed seem as if Libertarians had been dancing on the grave of the commonwealth and celebrating the virtue of selfish objectivism, at least up until a couple of years ago.
But, in addition to two ongoing military debacles, Afghanistan outlasting Vietnam, and the second financial earthquake (the big one?) upon us, I think there’s also great potential for this story to unfold in a more wonderful way. It may finally clear the decks for a non-ideological economic and political system based more firmly on interdependence and enlightened cooperation, thus fulfilling MLK’s vision of the arc of history—as inexorably trending toward greater justice.
It’s not naivity so much as brainwashing. We’ve had presidents tell us that greed is good. We are supposed to admire, even worship the successful.
The government was for sale, and it sold briskly. The ones who purchased it and control it are the loudest to denounce it.
We are told that limiting executive salaries will eliminate the supply of the smart people who make our lives as good as they are even as they figure a way to pay us a bowl of rice a day.
Seemingly rational people will tell you with a straight face that market forces should be the arbiter of all everything because it is the most efficient way.
Mention the space program to a libertarian, and they will tell you it was typical government waste. Global communications and weather satellites will never cross their mind. If those things were that important, the market would have provided them a long time ago.
Those poor suffering bastards trying to run their railroad in Atlas Shrugged… it’s ironic that a railroad was used because in reality, the government assembled the resources that made railroads possible.
Regulation hinders efficiency. BP lobbied against safety regulations and won – or did they win? Those safety devices are looking very cheap about now. But they will get bailed out. Just like the banks, BP will yell at congress for not requiring them to install safety devices, and the corporatist pig senators will say, “Sounds good to us.”
The government sucks because it is made to suck. Something made to suck is what tics and leeches love.
Worth repeating:
“The government was for sale, and it sold briskly. The ones who purchased it and control it are the loudest to denounce it… The government sucks because it is made to suck. Something made to suck is what tics and leeches love.”
If you have no memory, then history doesn’t matter does it?
And it is because of posts like this that I am a dedicated reader of your blog. Thank you, thank you, thank you for this post.
But we had – and still have – SarbOx. Lots of paperwork required to be filed, that doesn’t help. The CFO has to sign it with the threat of jail, but nothing ever happens.
You can have regulations, but when not enforced they are meaningless (like Pfizer’s fraud, but because it would be too inconvenient to Medicare some tiny subsidiary pleaded guilty and paid a fine).
Complex games require referees to make complex judgments.
Instead it might be too simple, but requiring things to be standardized and traded on exchanges where things have a bid and ask and margin needs to be maintained would eliminate a great deal. Nothing goes “off balance sheet” – if it is an asset or a liability it stays on. I don’t know about mark-to-market since many loans which are being repaid on schedule have no market.
Sunlight disinfects. It is always better than trying to regulate things done in the dark.
Another thing would be to have a sliding tax scale based on the amount of time you hold a security. We used to have partnerships concerned about the long haul. Now it is spike the price this quarter and loot the company (even when taken private using debt and a huge dividend). If the gains and dividends became tax-free after 10 years (and had a rate which was not punitive but would cause friction for short term trading), we could get rid of the 401k/IRA tax-free categories. If you want to wait 10 years to collect the dividends and capital gains, you will invest very differently than if you use a trading screen, and you will act differently if you are a CEO paid in stock you can sell today at no difference from 10 years hence.
I’m just throwing these ideas out as suggestions to show there are ways of structuring the rules without having a bureaucratic regulator which you will have to have yet another watchdog for the regulator to make sure they don’t do too much or too little.
I have one rule when deciding between Norquist’s view and a more expansive one – Assume regulatory capture. Assume Blankenfield runs the SEC.
There is no framework or mechanism where you can only appoint saints or angels to the post of regulator. They will either hate the industry and try to destroy it, be part of it so let them do what they want, or be indifferent and just pick enough low-hanging fruit to keep up appearances.
It is better to empower the people – the consumers.
They will make mistakes, but as you point out it is different if I make a mistake when the information was there v.s. if someone cheated.
And you can cheat by bribing the refree to say you didn’t but that doesn’t change the facts. Hence the populist backlash.
It is better to empower the people – the consumers.
That’s what it boils down to. The only right you have is to consume. More.
Thanks for the posting Yves. It prompted some interesting commentary.
We sure are in a pickle. It seems to center around concentrated and persistent centers of power. I bet if we legislated that heretofore there will be no money whatsoever passed on when someone dies that the priorities about what it means to be human in a society would change for the better.
What is the purpose of your life?
Well said Yves!