Back around the first of this past August I had a post dealing with another aspect of the problem I am now addressing. In that post I discussed political tools. I also referred to them as isms. Here I will term them ideologies. It makes no difference. Tools. Isms. Ideologies. They are all the same.
Ideologies are constructs. They are tools. They are to be used as such. They are not greater than a person; certainly not greater than the whole of a society. Only a fool devotes himself to a tool to the point of disregarding facts and the interests of even one human being. Yes. Fool.
There is afoot in this land a pernicious tool that says that regulation is bad. According to some of the fools who use this tool, regulation is always bad. These are the kinds of people who apply a hammer to a screw.
These people have a Bizarro World mentality. To them companies come first, then people. They have no problem regulating people but their ideology tells them that regulation of companies is the unpardonable sin.
Were there no people we would have no need or use for companies. A company commonly has and exerts more power than a person. Some say that power is neither good nor bad. Not exactly. Power is either good or bad, either now or prospectively. Remember that how one person perceives the exercise or potential of power is not necessarily universally shared.
It is unlikely that this power, when exercised, will be beneficial to all. Some may be harmed. Given the probable narrow focus and selfishness of those exercising the power of this company, a real or perceived advantage to the company can easily become a general harm to others.
If a company is causing general harm, the government, which is obligated to ensure life, liberty and the pursuit of happiness, is thereby obligated to exercise some control of that company. That’s called regulation. In other words, the government is obligated in certain circumstances to regulate.
Deregulation began in earnest with the advent of the Reagan Administration. Bush 41 carried it on. There was a brief respite during the Clinton years but it definitely was alive during his second term. Then comes the blank slate that is George W. Bush. He did know that he was a conservative. He wasn’t sure what that meant but he knew that he was a conservative.
Whatever these friendly conservatives told him was conservative he accepted. The two most important definers in the area of economics were Alan Greenspan and Phil Gramm. McCain, as Chair of the Commerce Committee for seven years, followed in the exact footsteps of his mentor, Phil Gramm.
These people led the way by dismantling the Glass-Steagall Act and every other vestige of protection the average American had. This allowed power to run rampant. It allowed greed to rule our entire financial system. To quote that famous military hero, Gomer Pyle, USMC, “Surprise, surprise.”
Back to Phil Gramm, McCain’s economic mentor, campaign advisor and likely Secretary of the Treasury, in any McCain administration. Phil has openly acknowledged that he was forced to repeat not one, not two, but three grades. How much higher a standard would one set for his mentor? This is the self-same Phil Gramm that opined back in early July that we are all a bunch of whiners; that there is only a mental recession. If he could wreak so much havoc as a Senate chair, think how influential he would be in charge of the Treasury for a guy who says he doesn’t understand economics.
Just an aside. It is very amusing to watch NBC and MSNBC talking heads avoid speaking of Greenspan’s culpability in this financial disaster. None of them want to, or perhaps are permitted to, upset Andrea Mitchell, Mrs. Greenspan. The first Mrs. Greenspan, Joan, introduced him to Ayn Rand, the guru to the intellectually challenged. She became his mentor. That explains a lot.
Knowing this cast of misbegotten characters, these poor benighted souls, in thrall to a tool, makes understanding what went wrong, how and why, quite a lot easier. We have avarice. We have no restraint. We have a mindset that puts money and companies and tools before people. CNN needs to replace James Earl Jones intoning “This is CNN” with Gomer Pyle’s tag line every half hour.
It isn’t ‘Country First.’ Actually, it isn’t ‘Company First.’ It really is ‘Me First.’ At least that’s what McCain said in a 2002 interview. He admitted that he had no overriding cause. He said he ran for president purely for personal ambition. So now we can reconstruct the correct order: Me First, Company First, Country First – unless we discover something else that belongs before that third first.
When you talk ideology, you are dealing with principles. Don’t forget that. We are looking at people who have told you time and again how principled they are. But then again, times change. Whatever was a principle for 26 years; whatever was a principle this past Monday; we now must regulate those terrible friends fiends who have done such terrible harm to the whiners – you know, those whiners who vote; those whiners who used to have a job, a home, health insurance . . .
These ideologues always know where to turn for the proper rhetoric when their ideologies come a cropper. They resort to populist rhetoric. Don’t be too harsh on them for running for cover. They will be true believers once again, as soon as the storm passes.
Ideologies are used, not as tools, as intended, by various people for various reasons. Some are so simple-minded that they can’t assess the world on their own. They need a ready-made map to follow. Others are just intellectually lazy. They could figure it out with some effort but prefer White Castles (Krystals down South) to having to cook a real meal for themselves.
There are people who need a crutch. There are people who really believe such nonsense. There are people who know better but also know that they can use ideology to manipulate people. Which is the most dangerous? I really don’t know. They all can be. Given the numbers all of these various groups represent in the aggregate, it is truly scary.
{ 12 comments }
As usual, another great read. I can’t speak for everyone here, but I enjoy your views on topics like these.
“You want me to either absolve all Republicans or, if that’s not possible, hold the Democrats as equally culpable. ”
No, I don’t. I just wanted you to agree, which you have done, that the Democrats share some blame.
Your original article put all blame on Gramm, and through him, McCain.
If I laid the blame too heavily, not on Gramm but on Greenspan and Gramm, it is because they are have been leading the charge. You don’t stop a charge by shooting at the rear ranks.
You may be more sanguine about the prospect of Gramm being SecTreas than I. Truthfully, without exaggeration, that scares me. You can see some of the results of their crusade. Even the best economists have yet to plumb the depths of this present crisis. To allow Gramm to have any influence is an appalling thought.
Perhaps my education in economics gives me a better insight or puts blinders on me, but the present situation and the potential fallout frighten me.
Instead of discussing Jameel Farrar and other unrelated trivia, let’s discuss the Senate Banking Committee, which should have been watching for problems in the banking industry. Since 1987, the Chairmen of that committee have been William Proxmire (D-Wisconsin) 1987-1989 , Donald Riegle (D-Michigan) 1989-1995 , Alfonse D’Amato (R-New York) 1995-1999 , Phil Gramm (R-Texas) 1999-2001 , Paul Sarbanes (D-Maryland) 2001 , Phil Gramm (R-Texas) 2001 , Paul Sarbanes (D-Maryland) 2001-2003 , Richard Shelby (R-Alabama) 2003-2007 , Christopher J. Dodd (D-Connecticut) 2007- Present. Looks like plenty of blame for both parties, to me.
I stated that there was blame to share on both sides. It doesn’t devolve to a simple counting of years in the chair of one committee, however. Glass-Steagall was rescinded under Phil Gram. That counts just a tad heavier. Who is sitting in the Oval Office appointing these regulators plays a role. One party has held the White House for 20 of the past 28 years. I cannot accept the contention that they are wholly blameless. I can’t accept that four years of Clinton involvement balances out 20 years.
All of the administrations during the push for deregulation have lied to Congress, have stonewalled (a phrase coming from a Republican administration) Congress, have ignored Congress, unless they had allies in powerful positions. This administration has done so even to its allies.
I have never contended that one side is blameless. But there are everyday sins and cardinal sins. The accountability required by the Sarbanes-Oxley Act is difficult to judge as equal to the elimination of the most basic protections by rescission of Glass-Steagall.
You want me to either absolve all Republicans or, if that’s not possible, hold the Democrats as equally culpable. I’m sorry. Some have proven better and more aggressive at the game. And, the facts just keep getting in the way. The only way I could accomplish that would be to put blinders on and tune in the ‘Drugged Out World Champion Liar Show’ aka ‘Rush’s Rants.’
Alan Greenspan remains the number one culprit and Phil Gramm retains his runner-up position regardless of their party affiliation. When Republicans have memorialized deregulation as their priority for decades and worked so hard to accomplish it, who am I to take their hard-earned reputation away from them. I am only accusing them of the exact same things they have been bragging about. I am not some sinister character assassin. I am merely acknowledging their claims to fame.
P.S. Robert E. Rubin, as Treasury Secretary under President Bill Clinton, helped repeal the Glass-Steagall Act. Congress, including Phil Gramm just allowed him to do it.
As I stated, the 2nd term of Clinton was involved. As you stated, he was one of Phil’s little helpers. That was, I think, in 1999. That others helped does not obviate the fact that Greenspan and Gramm were the leading actors. The fact that Jamie Farr (then Jameel Farrar) had a role in Blackboard Jungle didn’t mean he was the star or that anyone recognized him as an actor before MASH.
Well, fair and balanced couldn’t last forever, could it? John McCain as a member of the Commerce Committee is the cause of all economic woes, while Barack Obama, as a member of Homeland Security and Governmental Affairs Committee , which could have acted on financial regulation, gets a free pass. Okay.
Ed, I thought I was just drawing a line from Gramm, one of the two most culpable, to the problem. McCain has claimed Gramm as his mentor. He installed him as his chief economic advisor. The McCain camp still seems to expect Gramm to be the SecTreas. Was I unfair?
I am a populist. McCain’s rhetoric of the past couple of days is beyond suspect. Have they dug foxholes on Wall Street for all of the conversions? Was I too hard on someone who appears to use my position only as a temporary cover for his gluteus maximus?
I felt that I showed quite adequately that deregulation is the biggest problem with the biggest current issue. McCain, until Tuesday, has loudly proclaimed, indeed bragged, of being a complete and absolute advocate of deregulation. Do you disagree that deregulation is the problem?
More than a member, McCain was Chair of the Commerce Committee. Not only were the banks within the purview of his committee, he voted for deregulation consistently. Okay, I will try to come up with a rational rebuke for one of the junior members of the Homeland Security and Governmental Affairs Committee not ignoring airport security, hardening of nuclear facilities and foreign and domestic intelligence in order to do the job of the Banking and Commerce Committees and their chairmen, Gramm and McCain.
I still think I was fair. If you recall the argument from my book, balanced is usually not fair. Below is taken from page 192 of the book:
“In 2003, Paul Krugman, economist, professor, author and columnist for the New York Times gave a talk. He discussed the term balanced. He asked us to suppose that the President made a statement that the world was flat. He suggested that a ‘balanced’ headline might read, “Shape of the
Earth in Question.”
“For educated people in the 21st Century, indeed, most everyone, that would be seen as nonsense. But, balance would require putting such a statement on the same level as fact. Such a headline would not be fair to the truth, to reduce it to that level, just for the sake of balance.
“Putting truth and facts on a par with falsehoods and ignorance is unfair. It would be an ill-advised quest, to attempt balancing the unbalanced.”
First, no, I do not think deregulation was the problem. Banks and the banking industry are still supposedly regulated. Those regulatory agencies, however, failed in their duties and allowed the irresponsible practices that brought about the mess we are facing today. It is not that the banking industry was not regulated. It is that it was supposed to be regulated, but was allowed to run amok.
Second, your position on “fair’ and “balanced” makes “fair and balanced” impossible.
Gramm’s rescission of the Glass-Steagall Act took away the bulk of the regulation of the banks (protection of everyone else) we have depended on since the Great Depression. When powerful Congressmen are constantly spouting off about their desire for deregulation, the regulators will naturally be lax. When those regulators were appointed by a president spouting the same rhetoric, they will be lax.
When the regulators were formerly lobbyists for the industry they are supposed to regulate, you will have sex, drugs and rock and roll the way we discovered a week or so ago. The Interior Department Inspector General’s report quotes employees who believed that governmental ethics rules did not apply to them because they were “unique” and “part of industry.” Dealing with oil leases, this office comes under the purview of several committees, including Commerce. Where did they get the idea they weren’t to regulate?
The banking industry was allowed to run amok? Who was supposed to have oversight responsibility? To say that all of the regulations have not yet been taken off the books doesn’t absolve the banks, the regulators, Congress or the Oval Office. That isn’t even a weak excuse. They all supported deregulation, vociferously. They practiced and permitted deregulation.
Fair and balanced being impossible? My point is that that is often the case. When that happens, fairness remains standing.
If you don’t think that deregulation is the problem, would you agree that a lack of regulation is? I guarantee that one or both are at the bottom of a crisis that Greenspan called the worst in his lifetime. His age spans the Great Depression.
With the exception of the Fed the others you name have very limited and specific areas of responsibility. The credit unions are individually so small and conservative (in staying close to home with checking, savings and limited loans) that it is impossible they could have any significant effect on the overall financial system. The OTS? Come on.
Even the Fed went along with recission of Glass-Steagall. They also made no effort to stop the various types of financial institutions going beyond their traditional areas, e.g. investment banks into subprime loans. Opening these areas to institutions without experience in them was justified as increasing competition. More ideology. BTW, the banks are now so scared that they are unwilling to make loans to other banks. The Fed couldn’t make the loan to AIG. It had to get a loan from Treasury, who had to get a loan from China, or whoever.
As Jon Stewart said last night, if you are a taxpayer, congratulations. You are now the proud owner of an insurance company.
No one, not even the Fed, even tried to rein in the extreme leveraging that made a bailout necessary when there was something besides ever onward and upward. I guess the Invisible Hand was supposed to take care of it. In fact it could be argued that it did. It knocked over a house of cards.
It is not particularly a partisan issue. I did include the 2nd term of Clinton as a time of stupidity. But, the Republican Party essentially owns the efforts to deregulate. In the world of high finance (not your corner bank) there appears no real question as to who did the most pushing for deregulation and who was most influential: Greenspan and Gramm. Extensive searching still shows those two as the prime culprits.
Others helped. There was even a handful of Democrats involved. But nobody beyond Greenspan, Gramm and Bush, in that order, had anywhere near the influence on this subject that they had.
You are welcome to search for others. I do ask that they be economists, not apologists who, as I saw from 3 different spokespersons on 3 different programs yesterday, who said it was ALL the Democrats fault because they controlled Congress for the past 20 months. No blame was permitted of 8 years of Bush or 6 years of control of Congress and Bush. These spokesmen, particularly one spokeswoman, could not be forced to identify them or McCain as Republicans. Likewise, there was no mention of Bush. There definitely is a partisan element to all of this. Just because all of these spokesmen refuse to utter the word doesn’t mean that there have been no Republicans in Washington the past 28 years.
This does not have to be partisan. I remember counseling Abe that deregulation shouldn’t be the sole preserve of the Republicans. To unify the nation he needed to let Democrats in on the action.
Comments on this entry are closed.