To quote President Obama, I like to know what I’m talking about before I speak. I took courses in finance, accounting, statistics, and even a class on professional ethics in college, and I have a basic understanding of how Wall Street functions. But the truth is, I learned everything I know about regulation of the financial system from Sesame Street. When I was little I saw a segment on the PBS program about the importance of traffic lights, and the image of cars careening haphazardly through the streets, narrowly escaping collisions and sending pedestrians running for their lives, was indelible—one that repeatedly pops into my head whenever I hear debates about Wall Street regulation:
The particulars of TARP or debt-for-equity swaps are, to quote Obama again, above my pay-grade. I’m more interested in the larger issue of regulation and its role in a capitalist system. As Warren G and Nate Dogg once said, sometimes you have to regulate. Sure, they were talking about shooting pimps and getting high, and not the financial derivatives market, but the suits on Wall Street aren’t any less gluttonous than your average hip-hop artist. After all, it’s their job to be greedy—just ask Michael Douglas. And in a capitalist system, it’s the job of government to ensure that the system doesn’t run amok.
Whether it’s the financial sector, health care, or taxes, the right cries “Socialism!” anytime someone suggests that putting the interests of the people of America ahead of the interests of corporate America might be a good idea, or that supply-side, trickle-down nonsense is just that: nonsense. But when it comes to lining the pockets of legislators on Capitol Hill, greed doesn’t discriminate. In the late 1990s, Phil Gramm, then-Texas senator and future economic advisor to John McCain’s 2008 presidential campaign, wrote the bill that repealed Glass-Steagall, but Democrats were complicit in—if not outright enthusiastic about—rescinding the Depression-era law that prevented banks from getting their fingers into the insurance and securities industries.
And now the same business interests that helped create the problem are flexing their muscles and using their political influence on the Hill to prevent the very reform that’s necessary to fix it. The Washington Post reported today that Larry Summers, one of the president’s top economic advisors, was bribed—I mean, paid—handsomely for speaking engagements last year by Wall Street firms like Goldman Sachs. To wit, Bill Black, professor and former Director of the Institute for Fraud Prevention, told Bill Moyers last night just how little change he believes Obama has brought to Washington when it comes to the incestuous, deregulated relationship between Wall Street and the U.S. government.
The French Revolution was sparked by conditions not unlike the ones the U.S. is experiencing today: costly wars, increasing economic disparity, the refusal of the upper class to pay higher taxes, leaders who seem tragically out of touch or downright corrupt. Middle-class wages are stagnant in the U.S., while the top 1% of the country controls exponentially more wealth than it did 25 years ago. Let them eat pie! More precisely, let them eat a third of it!
By default, capitalism allows for the prosperity of big business—and yes, Joe, even for small ones to get big enough to graduate to a new tax bracket. A capitalist system encourages ingenuity, exploitation, and free enterprise. The problem is that instead of creating anything of value, industrious Wall Street traders, with the compliance of Congress, simply used their new capitalist freedoms to invent new ways of creating wealth that were so convoluted that it was impossible to see the forest for the bundles of bad investments that it was. As a result, the giant casino we call the stock market has become even more of a fantasy ride. It’s the job of the people we elect to represent us to make sure we don’t get run over.
This blog entry was originally published on Slant Magazine on the date above.