Who’s Watching the Store?
by Robert Sheer
It is the great and terrible irony of capitalism that if left unfettered, it inexorably engineers its own demise, either through revolution or economic collapse. The guardians of capitalism’s survival are thus not the smug free-marketers and brainy libertarians who, in defiance of the pragmatic Adam Smith himself, want to chop away at all government restraints on corporate actions, but rather liberals who seek to harness its awesome power while keeping its workings palatable to a civilized and progressive society.
Unfortunately, we seem to have misplaced all our liberals. See, whether it was child labor in dark coal mines, the buying and selling of human beings to pick cotton, or the unfathomable devastation of the Great Depression, the brutal creativity of the pure profit motive has always posed a stark challenge to our belief that we are moral creatures. The modern bureaucratic governments of the developed world were built, unconsciously, as a bulwark, something big and oafish enough to, occasionally, stand up to capital, much as a referee must show the yellow card to stronger, younger athletes. Our referees right now are as honest as that NBA guy with the gambling debts.
Sure, when times are relatively good, it is predictable that the managers of our government will be seduced by the mythology of capitalism. This seduction is fueled by bribes, legal or not, as well as by an echo chamber of excitement in the larger media and society. It helps too if the worst consequences of greed can be portrayed as dusty textbook memories no longer possible in our modern whiz-bang America.
Remember the “Dow 50,000″ guy? By the 1990s, having been beat up by Ronald Reagan, the Democratic Party decided to cut its ties with its Great Regulator and party builder, Franklin Roosevelt, having soured of playing the “good cop” exemplified by that moralizing bust, Jimmy Carter. With the steep decline in the clout of manufacturing unions, it seemed natural to follow the big money dripping out of Gordon Gekko’s Italian suit pockets.
It was Bill Clinton, a good but overly ambitious man, who tapped into this new paradigm so aptly, accepting both Wall Street money and vision, compliantly teaming with a Republican Congress to knock down the fences set up by FDR to protect the banking industry from its own greed. Clinton’s reward was to receive credit—and a second term—for creating a boom economy much like that of the “Roaring ’20s,” a series of bubbles creating paper wealth for the lucky folks already blessed with real estate, inheritances and high salaries.
When the Republicans took over for eight truly horrible years of non-governance, they were only too happy to look the other way as it became increasingly clear to all with a strong stomach and a keen eye that there was deep, deep, dangerous rot in the pillars of the globalization boom so celebrated by cheerleaders like the New York Times ‘ Thomas Friedman.
To make sure nobody with real clout authorized careful scrutiny of the pyramid schemes and predatory lending and all the rest of it, the sluices were fully opened. According to the watchdog group Public Citizen, Wall Street spent $5 billion in campaign contributions and lobbying over the past decade alone.
As we now know, of course, that five bill was chump change as an investment, seeing how the federal government has put up trillions in loans and toxic asset guarantees for these wheeler-dealers. Meanwhile, back in Real America, according to the Federal Reserve’s June 2009 report, seven straight quarters of declining household wealth left us $14 trillion poorer.
But the true horror for liberals who believe the power of capitalism must be harnessed for the good of society, rather than vice versa, is that their own party has been completely co-opted by the money guys. All the Goldman Sachs and Citigroup suits who talked Clinton and Congress into deregulating derivatives are now advising Obama, leading his Treasury department and so on. It’s as if Obama had hired Dick Cheney and Don Rumsfeld to run his Iraq policy.
Voters had thought Obama got it. To be sure, he can talk a great game. “Millions of Americans who have worked hard and behaved responsibly have seen their life dreams eroded by the irresponsibility of others and by the failure of their government to provide adequate oversight,” he said. “Our entire economy has been undermined by that failure.”
Yet as the ever-prescient Ralph Nader put it in a recent column, “One would think that his 88-page reform proposal to Congress would be up to his words. Instead he provides Washington aspirins for Wall Street brain cancer.”
As former Labor Secretary Robert Reich writes, “The [Obama reform] plan doesn’t stop bankers from making huge, risky bets with other people’s money. … Nor does the plan do anything to prevent banks from becoming too big to fail. It doesn’t hint at a return to the days before the late 1990s when commercial banks were separate entities from investment banks— before mammoth bank supermarkets like Citigroup came to be so tied up with so many other commercial and investment vehicles that they couldn’t be allowed to go under. And there’s not the slightest mention of antitrust law.”
The reality is our government will protect us from the extremes of capitalism only if we demand it does. Those watching the store don’t have our interests in mind, no matter how charming or well-spoken they may be.