The first thing I did when I sat down to write this blog was to go back and see what I said about it all before. It might be illuminating for you too. It is important to note the date (as always) -- February 22, 2009.
”In my most humble and amateur opinion, this may be the most significant quote of year;
”It may be necessary to temporarily nationalise some banks in order to facilitate a swift and orderly restructuring.”
February 18, 2009”
Sometimes, it’s hard to remember the uncertainty of the past -- the uncertainty while you were in the moment. In the middle of a crisis, clarity is difficult to find. Here’s former Fed Chairman Alan Greenspan -- The Wizard -- Ayn Rand’s disciple -- saying that the government might have to take over the banks.
The banks, of course, are part of “The Commanding Heights” of the economy. Along with the one we controllers are concerned about -- transportation. Finance, Energy, Transportation and Heavy Manufacturing. Not only was the phrase (The Commanding Heights) part of a speech from Lenin -- it was also an excellent show on PBS. I read the book -- and can highly recommend it.
I can’t think of a faster way for young people to understand the “big picture” in terms of how our economy changed -- and where we went wrong. And we did go wrong. Keep in mind that we blew up the world’s economy. Over and over and over, we come back to the same point in time where we -- as a nation -- changed. From the PBS page entitled “Key Events”:
”1981 United States -- President Reagan introduces supply-side economics, breaks air controllers' strike, deregulates markets ”
That’s it -- in a nutshell. And air traffic controllers were in the middle of it.
Supply-side economics has been discredited. History has proven PATCO had a point -- and American wages have declined in lock step with the decline of unions. Deregulated markets have given us stolen airline (et al.) pensions, the Savings and Loan Crisis, Enron and The Great Recession.
In my opinion, the case could not be clearer against what I will call Reaganism. It has been a complete and utter failure. The greatest failures can be placed under a single term -- laissez-faire.
”In economics, laissez-faire describes an environment in which transactions between private parties are free from state intervention, including restrictive regulations, taxes, tariffs and enforced monopolies.”
Regulations -- specifically the banking regulations like Glass-Steagall.
Taxes -- Cutting the tax rates of the wealthy has not only created the social havoc of income disparity, it has indebted the nation. The gutting of “the death tax” -- more properly defined as the Estate Tax (emphasis on “estate”) -- has allowed a modern-day feudalism to take root in America. Not unsurprisingly, the inheritors of great wealth have used that wealth to buy political power to protect their wealth -- at the expense of the rest of the country’s citizens and the country itself.
Tariffs -- Although I don’t delve into this area much just a quick peek at the surface tends to confirm my deeper suspicions. Look at NAFTA. The Cato Institute loves it. The Economic Policy Institute hates it. (Krugman mentioned the EPI just yesterday.) The unions were against it from the beginning. If you think about what has happened to U.S. wages in the last 18 years, you have to wonder where the benefit to the U.S. worker is.
Which brings us to the point. You have to question the old saw, “What’s good for GM is good for America.” More broadly, is what is good for American corporations good for America? In recent times, that answer has been a decided “No”. Look at our current state of affairs. GM used to promise a lifetime career, good pay and good benefits. All three of those promises have been broken. Yet, America has been good to GM. And I must toss in (as I have before), is it even useful to think of corporations as “American” anymore?
Just as corporations have gone “multi-national”, this problem of balancing their power has gone worldwide. The problems that Europe is having aren’t that different than what we in America are experiencing. And the root of that shared problem -- at the moment -- is the banking sector. Our Ronald Reagan was actually following Margaret Thacther’s lead. She cut regulations, broke the unions and bet on banking being “the next big thing.”
Banks were the next big thing -- because government allowed them to be so. They not only got big, they got too big. And three years after they blew up the world’s economy -- they are still too big. As a matter of fact, they’re bigger than ever. As Robert Reich said, “I don’t often agree with Alan Greenspan but he was right when he said last week that “[i]f they’re too big to fail, they’re too big.””
It is high time our government broke up the big banks. It is high time we reregulate not only them but the other industries of the “commanding heights” too. (And yes my friends, that does include the airline industry. ) The balance of power in our country is seriously out of whack. We need bigger unions and smaller banks. Balance is the objective.
We must get the obscene amounts of money out of our political elections. The ones that have the power will not give it up willingly. We will have to take it. Right now, that can still be done with your vote. The season is upon us. Get registered to vote now. Get involved. Get loud. The country you save might be your own.
November 1, 2011