By Simon Johnson
The financial reform legislation currently heading into a June Senate-House conference will, at best, do little to affect the incentives and beliefs at the heart of the largest banks on Wall Street. Serious attempts to strengthen the bill through amendment – such as Brown-Kaufman and Merkley-Levin – were either shot down on the floor of the Senate or, when their prospects seemed stronger, not allowed to come to a vote.
Senator Blanche Lincoln is holding the Alamo with regard to reining in the big broker-dealers in derivatives. But these same people are bringing to bear one of the most intensely focused lobbying campaigns of recent years, bent on killing her provisions (or weakening them beyond recognition). All the early indications are that the lobbyists, once again, will prevail.
At one level, Robert Kaiser nailed this topic in his recent book, “So Damn Much Money: The Triumph of Lobbying and the Corrosion of American Government.” Elections have become more expensive, with most of the funding provided by special interests. You can argue about which is the chicken and which is the egg, but the basic facts are inescapable.
“In 1974, the average winning campaign for the Senate cost $437,000; by 2006, that number had grown to $7.92 million. The cost of winning House campaigns grew comparably: $56,500 in 1974, $1.3 million in 2006.”
Or look at the lifetime contributions by the financial sector to (some) senators who voted for and against the Brown-Kaufman amendment, which would have imposed a hard size cap and a hard leverage cap on the biggest banks – over $2 million per senator by this one partial count.
But wait. This is actually very little money considering what is at stake. For an individual large firm actively engaged in derivatives trading, the stakes could easily be in the billions of dollars. For the big banks as a whole, the amount they will be allowed to earn (and pay themselves) as a result of the failure of these financial reforms is – conservatively speaking – in the tens of billions of dollars.
In terms of modern Wall Street – for top bankers and also for hedge funds – the political contributions needed to make a difference are chump change.
And even if opponents of today’s biggest players on Wall Street were to become organized and raise money, presumably the big financial players could see that money and raise you some tens of millions of dollars without breaking a sweat (particularly after the Citizens United decision by the Supreme Court).
What can you possibly propose that would make a difference in the face of such resources – for example, as they will be deployed in and around the upcoming House-Senate conference to make sure that anything at all objectionable to Wall Street is further diluted?
Here’s the one idea (not mine, but the source prefers to remain anonymous): counter the money of Wall Street by bringing much more transparency to the conference.
Televising the conference meetings could help, but realistically this is also likely to push the substantive decision-making and discussion off-line. Therefore, in addition, congressional leaders should be pressed agree to three non-waiveable rules for the conference and the conference report on the Wall Street reform bills:
- Any amendments need to be posted on-line not less than three business days before any relevant conference meeting. Second degree amendments (i.e., those filed as amendments to amendments) need at least 2 days notice on the same basis.
- The House and the Senate will not discuss any conference report until the report as amended by the conference has been posted on-line in its entirety for at least 5 business days.
- A red lined version of the conference report as amended – to show all changes – must also be posted on-line for not less than 5 business days before any vote on that conference report.
Without such provisions – which, by the way, are unlikely to be adopted – no one excluded from the backrooms will have the opportunity to learn what the amendments do or what is in the bill itself.
The point is not that this would necessarily stop the final and nearly complete victory of special interests. But at least we will learn which members of Congress exactly sided with them, on why, and even why. And this will help a great deal as we think about how best to move forward.
An edited version of this post appeared this morning on the NYT.com’s Economix; it is used here with permission. If you would like to reproduce the entire post, please contact the New York Times.
86 thoughts on “So Damn Little Money”
Fantastic post. Incredible that the US Government (and ours here in the UK) is helping countries all over the world to “tackle corruption.”
Any hardened free-marketeer should recognise the flaws in a system where buying influence costs $x and gains you $1000x. And any free marketeer who defends this system should be honest with himself and others that he does not believe in democracy – the political freedom of the citizens of his country.
It seems that you suggest that a possible solution is to make elections even more expensive, so the return-on-investment is much less attractive to the special interests. We could make candidates pay for their TV debate time at similar rates as their 30-second attack ads.
Or, we could indicate that our votes are “not for sale,” countering the influence of the money. This is one silver lining to the Tea Party cloud that otherwise blots out the sun of democracy.
sorry to hog blogspace… but this also demonstrates perfectly the fallacy behind the extreme versions of “It was the regulators fault (they were weak/stupid/malleable”) argument, i.e. the fallacy that our regulatory framework is independent/ exogenous of the will of the financial sector.
Meanwhile, “Banking split essential to avoid new financial crisis, warns OECD adviser
‘We need to separate capital market banking from standard commercial banking. That’s the most basic lesson of the crisis,’ says Adrian Blundell-Wignall”
But why should the USA listen to this sound advice?
Center-right had \”readthebill.org\” for the healthcare debate. How about a similar posting (72 hours in advance) for the financial reform bill now in conference between the members of Congress – this time can be different!
1. Special tax on the profits of large corporates profits and use the money to fund elections. This is somewhat complicated because you want to avoid the wastefulness of dozens of people standing for office because they get free money to do so. But it can be worked out. Some money raising should also be possible: I suggest that some of what each candidate raises is distributed to others in the race (20%?).
2. Shake up Congress. In a similar fashion to having regulators assign Rating Agencies, we should stop the Congressional seniority system that makes senior Congressmen so powerful. Rotate committee assignments and the chairmen of the committees. In fact, it is undemocratic for any Congressmen to have more power than any other.
We are captured. Any attempt to regain control at the national level — by passing laws limiting duration and cost of campaigns, by empowering voters to recall, by limiting lobbying — will be checkmated by the big money interests. No new party like Tea can help either, because any party can be soon corrupted. I think our best hope is to pass laws state by state so voters have real home-base control of the people they send to Washington. That could be really interesting . . contracting to lifetime limits on income and wealth, with full transparency, monitoring of all contacts except family while in office, etc. There would be good people who would come forward to do this. It would be not unlike joining the army when one’s country is under attack, or joining a monastery when one is a true believer. And state by state the people might be able to enact legislation which backs such political contracts with all the power of criminal law.
All you can do is keep informing. One never knows when the traction changes. It’s not predictable.
The Tea Partiers are going to make a huge mistake in mis-identifying their real enemy. If they succeed, then and probably only then, will they understand their mistake.
As for the oligopoly problem, it will change only when the economic pain it imposes reaches down to enough people. Unemployment over 20% should do it. Gasoline at $4 would do it. Another round of billions in bonuses should do it.
This Supreme Court could do it too.
Sen. Dodd claims this is “The Bill that will stop too-big-to-fail bailouts”. “Intelliunits” says, “if one believes this, bless one”.
They outline why the Financial Bill is more theater than real change mainly because their premises of what cause the financial crisis and the recession are all wrong; but mostly because they are being covered for political reasons.
The piece tells it better in, “Financial Fix: The Patients Are In Charge Of The Ward”, at http://www.intelliunits.com
For national elections, tax $1/candidate/year for each representative that represents you. $4/yr tax that goes directly to these elections. Each representative gets $.50 of their dollar to spend on electioneering, and the other half goes to the other candidate in the race. If there are more than 2 candidates, Split it evenly among the candidates.
NO MONEY can be spent on commercials supporting a candidate. Each Television station would be required to run a 2 minute commercial from every candidate in the race at 6:00 pm and 8 am local time for the Two Weeks before the election. (they are our airwaves after all).
Also, buy up an apartment building and a cafeteria for all representatives. IF a lobbyist wants to talk to a lawmaker, they’ve got to eat in the People’s Cafeteria.
There are problems and loopholes with these propositions, but I’m just throwing out ideas here.
Is your faith in Blanche Lincoln misplaced? From what I’ve read from comments on Baseline Scenario her derivatives reforms could be political theater created to help her get elected. The pressure to change those reforms could be cover for her (post election).
I’m also wondering to what extent trotting out Volcker and his reforms have been political theater. Obama should be able to have some influence over reconciliation (and my hopes were raised when he said at his new conference that he’d be involved in reconciliation) so I’m thinking that if reconciliation results in a weak bill verses how strong it could be after reconcilation then Volcker was all theatre and was just an attempt by Obama to LOOK like he is being tough and distance himself SOMEWHAT from Wall Street.
I’ve been hopeful that Obama himself is not captured, but I’ve also said many times that nothing changes as long as Geithner and Summers are on board. In my mind, a weak reconciliation shows that Obama has either learned nothing and/or is, maybe was always, captured. (ignorant or captured – either of these is unacceptable.)
That it even still occurs to Johnson that “transparency” has any hope of bringing an end to this absolutely hopeless corruption boggles the mind. And it isn’t simply Wall Street that’s the culprit here, its the drug, insurance, and defense industries, and, when it comes to Middle East foreign policy, the Israel lobby. And we lecture the government of Afghanstan about corruption? It is the lamest possible of thinking now to imagine the government of the United States as responsive to its citisens. Exercizing the franchise has become complicity in this outrageous farce. There is literally no hope for democracy in this country short of strikes and demonstrations.
“The angry workers, mighty in their numbers, are marching
irresistably against the arrogant. They are shaking their fists
at the sons of privelege. They are laughing at the dainty
affectations of the Leawood toffs. They are massing at the gates
of Mission Hills, hoisting the black flag, and while the
millionaires tremble in their mansions, they are bellowing out
their terrifying demands. “We are here,” they scream, “to cut
— Thomas Frank, What’s the Matter with Kansas, 2004
1. NEVER tell the American people bad news (kiss babies, pat backs, talk of American greatness and better times ahead – oh and don’t forget the attack ads).
2. ALWAYS do everything you can for wealthy donors (less regulation, lower taxes, pork, etc.)
This has been a recipe for scandal and disaster, and, with $13T in debt – and many times that in unfunded future obligations, it is building to a crescendo.
In democracies (by opposition to plutocracies), TV time is allotted equally, free of charge. The system in the USA is unique in its flaunting of the debauchery of wealth used to elect the plutocratic representatives.
There are actually government regulators who are in charge of enforcing equal time (and Sarkozy, in France recently got problems with what regulators viewed as stealth campaigning and wanted to take it out of his party’s time).
Other countries know how to limit junk candidates, because they have to apply through a process involving signatures (of citizens, and/or elected reps), and, for the big jobs, such as president, a modest sum of money.
Some countries (Australia) use a multiple vote system, others (France) a two turns system (first turn functioning as an open primary, but if one candidate goes over 50%, s/he gets elected, as in the first by the post British system)
Mr. Johnson wrote:
“The point is not that this would necessarily stop the final and nearly complete victory of special interests. But at least we will learn which members of Congress exactly sided with them, on why, and even why. And this will help a great deal as we think about how best to move forward.”
“….banks will always seek and succeed in finding loopholes in
financial regulation. As a consequence, a non-regulated shadow banking system — ”
wow sooo funny ! — thanks, engineer — once again a great comment !
I read this somewhere and it is supposed to be one of the pillars upon which this country is formed: “government of the people, by the people, for the people, …..”
No it isn’t. it is rather:
“government of the corporations, by sleazy politicians and lobbyists for the corporations and hope of re-election…..”
In my opinion, politicians are just another MOB with the power to legalize its actions.
The USA, differently from Greece, does not have deeper pockets and sterner figures to rescue it.
Although…China played this role for a while, financing the USA, and this is not really reassuring. The knowledgeable will remember that Persia (the fascist plutocracy) supported financially Sparta (a muscle bound, brain challenged fascist oligarchy). The result was the near annihilation of Athens.
It appears to me that it is not transparency so much as TRUTH that people wish to see.
It’s a generational flavor. Perfect recent example – that candidate running for Senator in AZ – he totally made up the whole story in his mind that USA never declared war against Germany and then BELIEVED what he made up.
He’s not alone, is he? Over and over again we see that a whole generation makes stuff up that is NOT TRUE and then they construct a whole “philosophy” for living based on their own DELUSIONS.
The generation older than them cultivated the delusions (classic perfidy)
because that’s how THEY continue to LIVE in their “institution” of to hate, revenge and greed.
The generation younger than them – rebelling teenagers – well, “tribal” organizations prove that it is “democracy” that is social “stasis”, and not vice versa.
Democracy is what is always under attack, no?
“Poor man wants to be rich, rich man wants to be king, and the king ain’t satisfied ’till he rules everything…” – Springsteen song :-)
Still, it’s all a human problem. Therefore, there are human solutions.
Yes, massive fraud is running fast and loose – GLOBALLY.
So next up for consideration is “FORCE” – as the saying goes, “you and what army…?”
Okay, I’ll do it. “Modernize” the Declaration of Independence phraseology.
First, though, an older history lesson from 1000 years ago – “Just War” – wiki it…
Yes, it took 1000 years for OLYMPIC LABOR to re-build itself after Rome went poof from too much militarism and, right on schedule, the RABBLE organized one big plunder raid to STEAL THE FRUITS OF INTELLIGENT, PROGRESSIVE LABOR…
Not hard to figure out who are the ancient guardians of “civilization”, is it?
It really IS “not about the money”…
When the premise of the post and the referenced article is the control exhibited by the financials over politics it’s idiotic to suggest enacting a tax on financials to curb their power. In fact it’s a stretch then to suggest that the solution lies in politics at all. And let’s put aside the idea of some violent revolutionary act. The thing that leaves is an economic boycott. Don’t do business with the largest banks. They’ve gotten so large not (directly)because they’re so profitable and so much better at client service. They got big through a relentless wave of consolidation that has mounted since at least the early 1990s, and has only accelerated in the shake-out from the crisis. Then there was the whole disintermediation thing, which in fact has to a great extent come full circle with the repeal of Glass-Steagall. Nevertheless there are still local alternatives pretty much everywhere. Would it matter if the 6 or 13 largest financials controlled the lion’s share of the securities action if they were starved of deposits? Wells Fargo is paying me nothing for my deposit account. I can get that from the community bank around the corner.
Check out “Sum-Zero Earmarks” on the editorial page of the WSJ today. Three Harvard profs found that committee and subcommittee chairmen bring an increase of 20-50% in earmarked dollars to their state. More interesting findings that are destined to be buried are that “public money is crowding out private investment” (no surprise here) and that the “average firm [located in the state] cuts back capital expenditures by roughly 15%” throughout the years of committee leadership by their state Congressman or Senator. So all this “bacon” that they are bringing home only growsthe public sector and their own fiefdoms.
Agreed, Anonymous. And it’s not going to get better: 40% of the growth of Japan in the last two lost decades, is due to government spending (it is said). And we are heading the same way.
My solution: more government, but fair, transparent, and competent. One would need to create national banks, made specially to lend to the worthy. Worthy projects, not worthy plutocrats.
“I read this somewhere and it is supposed to be one of the pillars upon which this country is formed: “government of the people, by the people, for the people, …..”
I also read somewhere, that the “pillars upon which this country is formed”, did not include indentured servants. Today the bankers hold the contracts. The tradition continues.
“In addition to slaves (who were mostly from Africa), Europeans, including Irish, Scottish, English, and Germans, immigrated to North America in substantial numbers as indentured servants, particularly to the British Thirteen Colonies. In the seventeenth century, however, nearly two-thirds of English settlers came as indentured servants. For most of the seventeenth century, however, indentured servitude was not a guaranteed route to economic autonomy. Given the high death rate, many servants did not live to the end of their terms.”
You read it in Lincoln’s Gettysburg Address.
“Wells Fargo is paying me nothing for my deposit account. I can get that from the community bank around the corner.”
When deflation rears it’s head, you’ll be laughing all the way to the bank, even at 0% interest. Be smart, don’t worry about chasing profits in the short-term (2-3 years), preserve your assets.
Everything eventually changes, when it does, you’ll make out like a bankster. My 2-cents.
“All you can do is keep informing. One never knows when the traction changes. It’s not predictable.”
We need to fix the root problem by reforming campaign finance rules.
There is plenty of information there for the “transparency” Simon asks for, but the problem is that it’s hard to get the public to pay attention. Someone should make a YouTube video based on some footage from the Senate debates, with floating labels in front of each Senator showing how much money he/she received from the financial lobby. Add a catchy sound track. This seems to be the best way to get public attention these days….
Once we figure out how to reform human nature.
Thanks for the advice. My point was not about chasing yield, perhaps you knew that. My point was that sometimes a boycott means hardship for the boycotters. In this case it does not because you can obtain comparable services at similar pricing as the megabanks provide from other vendors.
This is a really good idea.
“Money” by Pink Floyd would work.
Sorry to butt-in but I couldn’t find an email to send a question & link to so, does anyone know about the IMF contemplating loans to California? If this is possible, what would this mean to the US economy?
Right – can’t reform the nature of an oligarchy or plutoRats or wha’ever else you wanna call sadistic psychos and their hedonistic masochist syncophants.
The above LIST is a MINORITY that cannot point ot any epoch in the history of CIVILIZATION where their ideology did anything other than DESTROY everything that is true, beautiful and good.
There IS such a thing as a JUST WAR.
I’m open to suggestions about something other than the use of FORCE…
Rule of Law is off the table…
Nope. First “institution” to capitulate to psychos – especially here in USA – remember Jim Jones…?
Cyber antics is a way to win a skirmish or two…already a court case was WON by the overwhelming evidence that the DATA
AND the “database” was FLAWED – yes, the official court document uses the word “FLAWED”…
I guess a “flawed database” is “intelligence failure”, eh?
Human nature – GIGO?
“They” take all our PERSONAL information BY FORCE OF LAW and make CLOSED DOOR decisions about how to rob us?
Sounds like a pre-emptive WAR strike to me…
Yes, yes I am working the psycho-logical “closer” angle to get “politicians” to SAY that the “Declaration of Independence” of 1776 is IRRELEVANT…
Go for it…make the case…
I’ve often wondered why the other ‘great powers’ in American politics — other companies, are not more opposed to Wall Street and the Health-care Hooligans. After all, the drag imposed by these leeches is borne by their companies as well. For example, wouldn’t Verizon, GE, GM, etc. executives love to have a national health care system to increase their worldwide competitiveness? Or, is the ‘club’ of executives just too strong a cultural phenomenon? They must oppose ‘socialism’ or regulation even if it might benefit them? Or, are they are already making so much money on personal level that they really don’t care?
Yeah – kinda like trying to understand the relationship between USA and Israel —
“Thanks for the advice. My point was not about chasing yield, perhaps you knew that. My point was that sometimes a boycott means hardship for the boycotters.”
I’ve been there as a whistle-blower, I don’t want to put my family through that again. Our resources are finite.
The corrosive power of money is about to get a lot more toxic, if this story in Rolling Stone is accurate:
This paragraph made my blood chill:
As the summit at Rove’s home revealed, however, American Crossroads is just the tip of his big-money spear. Through Steven Law, the group’s spending will be tightly coordinated with his former employer, the Chamber of Commerce. “Steven will always be an ally,” Tom Donohue, the Chamber’s president, declared in announcing Law’s departure to lead Rove’s project. The Chamber itself expects to spend $50 million for campaign advertising – a 40 percent increase over 2008 – in what Donohue calls “the most aggressive voter-education and issue-advocacy effort in our nearly hundred-year history.”
(The $50 million the Chamber plans to spend is in addition to the $30 million Rove and Gillespie have already raised so far. How many compliant, bidness-friendly flunkies do you suppose that money will buy?_
20% is not even close. We now have a rate of underemployment of 17%. There are many groups of people who still do not personally know many unemployed people. Unemployment will need to be really nasty before the people will revolt, maybe 33%. When counties are going broke by the thousands, then people will awake.
The Tea Party is a joke. Most of them get their marching orders from Faux News. I still remember hearing a woman tell me back in 2004 that she would not vote for John Kerry because he was a flip-flopper. I finally realized she had swallowed-whole the Faux News party line. Not that Kerry would have been a great president.
“He said the company even takes pictures of employees and distributes them across the entire organization, to recognize those who have called so-called time-outs.
But why then did no one say “stop?”
Exclusive: US Probes Goldman’s Timberwolf Deal, Alleged Victim
Says ‘Whole Thing Was Fraudulent Concoction’
05-27-10 – Huff Post – excerpt
“The federal prosecutors investigating Goldman Sachs are focusing on Timberwolf, the infamous “shitty deal” repeatedly cited in a tense Senate hearing last month, according to people who have been contacted by the Manhattan U.S. Attorney’s office.
The probe raises the possibility of criminal charges against the storied Wall Street firm, which was charged in April by the U.S. Securities and Exchange Commission with civil fraud for allegedly misleading investors about another subprime mortgage-related security called Abacus.
In an interview with the Huffington Post from his office in Geneva, Mapley said that he has been contacted by the U.S. Attorney’s office and that he expects to be interviewed by them soon. Mapley brought his complaints about Goldman’s role in the deal to the SEC in December 2007, met with SEC lawyers several times in 2008 and he says that he continues to talk to them.
“Overall, the whole thing was a fraudulent concoction,” says Mapley, who says that it was one of the most egregious cases he had seen in his decades working in finance. ”
Thanks Annie. :-)
Question: “How much of that shxxty deal did you sell to your clients? ”
Goldman Sachs: ” I don’t know.”
“Money for nothin and chicks for free
Now that aint workin thats the way you do it
Lemme tell ya them guys aint dumb
Maybe get a blister on your little finger
Maybe get a blister on your thumb”
Transparency is only part of the answer. People know that elected officials are influenced or bought by big monied interests. The costs of campaings must be reduced:
Take back the “airwaves;” they are public resources and allow them for use by threshold candidates for air time during elections.
Publically support those candidates that meet a threshold with meaningful amounts of money.
Pass legislation again that seeks to counter SCOTUS decisions.
Make election day a national holiday. Give incentives for voting.
Make voting registration simpler. Fraud claims are overblown.
Allow for voting over a couple of day period to discourage calling of the elections the night of (sorry, but would help for different time zones and encourage people to vote).
Improve our education system to improve the knowledge of the electorate (tall order).
The Slamhound is still on my asx, Hiding in plain sight.
Apology to William Gibson…Count Zero
“Transparency is only part of the answer….
Improve our education system to improve the knowledge of the electorate (tall order).”
Amen to that.
Re: @ Annie____The candidate from Az. running for the senate is correct. The British declared War on the French Navy, and destroyed (masaquered) their (2nd most powerful in Europe behind England) fleet. FDR was warned by the Germans not to offer (supply ships with guns,ammo,resources,and technical know-how,etc.,etc.,?) helping the British in Int’l waters within Germany’s wartime legal juristiction. The American’s took sides with the bloody British once again, and blatantly ignored the German’s plea (similar too the Soviet’s supplying Iran with Nuclear Weapons know-how,etc.,etc., or China offering up financial assistance to N. Korea with various other goodies?) thus the Germans were forced to go to war wih America sinking the our supply ships. The Declared War first after sinking US Supply ships in their waters while fighting off the British. FDR’s hands were tied, and forced to accept war as the only alternative. PS. The war was coming to an end, but after England got envoled, the Russian’s got heavily evolved. Once again the British would have none of that,…they felt their honor was being tarnished! FDR’s propaganda machine was hard at work once again making America pay at England’s hubris arrogance! Afterall, it ended the “Great Depression?”
A mix of truths and non-truths you made. Churchill gave orders to destroy the French fleet at Mers El Kebir, true, but that was not a declaration of war. Weeks before, he had proposed to unify France and Britain, and the Free French (General De Gaulle)agreed. The French government though melted as the Nazis reached Bordeaux. Churchill, who spoke French fluently was not anti-French.
The French had asked the USA to side with them in months prior, but a pro Nazi policy from US corporations and plutocrats was still in force, and the USA waited, until December 11, 1941, when Adolf Hitler and his Nazi government declared war to the USA.
If the USA had been at Munich, with France and Britain, the German generals would have killed the Nazis, and that would have been it. As it was, the German generals assumed that the USA supported the Nazis, until it was too late, and France and Britain declared war to the Nazis, September 3, 1939, after an ultimatum to get out of Poland. Some US corporations and plutocrats then went all out to help the Nazis, sending emergency military supplies to win in Poland as the Poles fought for their lives, and 45 French divisions attacked in the West.
You’re getting there, but you really must disabuse yourself of that fantasy about approaching “reform” from below, from the state level as it were. State government is just as corrupt as the cesspool one finds in Washington and if the ruling class were ever to feel that there were exposures at that level they’d be all over them, trust me. Eventually you’ll have give in to the obvious and conclude that any effort to reform the system short of starting all over again is a pipe dream, which will then leave you with the unmistakable logic of the mass demonstration and the general strike. Why even Simon Johnson lately has begun sounding frustrated enough to embrace such an approach. Time and repeated foolishness has a way of converting even the obnoxiously credulous.
Not at all sure the problem is generation, Annie. Social fascists and kulaks are social fascists and kulaks in every age.
“In terms of modern Wall Street – for top bankers and also for hedge funds – the political contributions needed to make a difference are chump change.”
Yeah… we are the chumps that provide that change, and what do we get for OUR money…? NO CHANGE!!!!
“In terms of modern Wall Street – for top bankers and also for hedge funds – the political contributions needed to make a difference are chump change.”
Yeah…and we are the “chumps” who provide that change, and what do we get for our money? …NO CHANGE!
Impose term limits!
Obama today: “… blasted a ‘scandalously close relationship’ he said has persisted between Big Oil and government regulators.”
Excuse me. How disingenuous is that statement from a guy who selected Geithner, Summers, Bernanke, Storch et at. to address financial and economic issues.
This kind of propaganda is nauseating.
I assure you, this progressive independent will never, and I mean NEVER, vote for Obama again. I may not vote, but so it goes.
Let me pile on, here; I agree with Kliment. One reading of the history of expansion of the growth of the federal government’s role in local affairs is that it has been necessary to fill vacuums created by state and local governments’ failures to respond to the implied social contract between the governed and the governors. State and local governments have consistently been captured by moneyed, special interests (return on investment is greater than at the federal level) even more than federal governments. Why are OSHA, the FDA, the FDIC, the OCC, the FCC, etc. even necessary? If the states were willing to regulate, say, meat processing at all, much less effectively, there would be no need for an FDA. Why didn’t all state governments protect the rights of people of color? The classic examples of moneyed special interests owning their “elected” state officials are real estate developers, the real estate sales industry, professional sports franchises (and the developers and builders of stadia, of course), retailers and transportation companies.
The historical pattern tells us unequivocally that reform must come from the ground, but, it must bypass the states, counties and municipalities on the way up and go directly to Congress or the federal Courts. If the Congress responds and/or the Courts respond appropriately (given a reasonable Supreme Court, which we don’t have, now), they have to create legislation and shove it down the state’s throats (witness the current situation for medical care payment reforms that 19 states are challenging in the courts).
Wall Street’s War
Congress looked serious about finance reform – until America’s biggest banks unleashed an army of 2,000 paid lobbyists
June 10, 2010 – Matt Taibbi – excerpt
“It’s early May in Washington, and something very weird is in the air. As Chris Dodd, Harry Reid and the rest of the compulsive dealmakers in the Senate barrel toward the finish line of the Restoring American Financial Stability Act – the massive, year-in-the-making effort to clean up the Wall Street crime swamp – word starts to spread on Capitol Hill that somebody forgot to kill the important reforms in the bill. As of the first week in May, the legislation still contains aggressive measures that could cost once- indomitable behemoths like Goldman Sachs and JP Morgan Chase tens of billions of dollars. Somehow, the bill has escaped the usual Senate-whorehouse orgy of mutual back-scratching, fine-print compromises and freeway-wide loopholes that screw any chance of meaningful change.
The real shocker is a thing known among Senate insiders as “716.” This section of an amendment would force America’s banking giants to either forgo their access to the public teat they receive through the Federal Reserve’s discount window, or give up the insanely risky, casino-style bets they’ve been making on derivatives.
That means no more pawning off predatory interest-rate swaps on suckers in Greece, no more gathering balls of subprime shxt into incomprehensible debt deals, no more getting idiot bookies like AIG to wrap the crxppy mortgages in phony insurance.”
“If the USA had been at Munich, with France and Britain, the German generals would have killed the Nazis, and that would have been it.”
This is cheap pseudo-history. The matter of Hitler and the Army was decisively resolved in 1934 with the murder of Roehm and the suppression of the SA, measures that the Army actively had sought. But the price was the loyalty oath the Army was subsequently required to swear to Hilter. Hitler was enormously popular with the German people from the time of his ascension to power to the beginning of the war. What opposition to Hitler and the National Socialists existed within the Army during this time centered on the question first of war with Czechoslovakia in 1938 and second of that with Poland in 1939. The vocal opposition of Beck in 1938 to a war with the Western powers resulted in his dismissal as Chief of Staff and while there were plans amoung a narrow circle of officers for a coup should Hitler take overt steps toward war, these had only the highly conditional support of Halder, Beck’s successor. Interestingly, it was only because the Munich conference occurred at all, that these plans were shelved. And by 1939, Hitler’s vision of the recovery of lost German lands to the east in Poland had genuine resonance among the largely Prussian general staff. The matter of American attitudes during this period was an utter irrelevance to them.
You are correct that a certain % of humanity remains dangerously abnormal.
30% of obsessive compulsive control freaks focused on micro-managing what their neighbor eats as a way to “save” how much gets spent on “health care” instead of LOOKING at the reality of damage to the environment.
You do create “generational” FORCES through the process of RAISING children. Especially when the children are being educated in “institutions” instead of in schools of LEARNING.
“American Idol” would have never been a hit TV show during the “hippy” flavored generation.
I know you both are correct if one tried to work within state systems as they now exist. What I am thinking of would be a real upheaval, brought on by economic and social crisis. States are corrupt indeed — but they are more LOCAL. If change has to come by mass action, massing in the streets and paralyzing the system, Washington is very far away for most people — especially in times of economic hardship — but most state capitals are within a day’s journey.
I sort of agree with you with the caveat that the operative word is “could,” as in “hypothetically/logically possible”. THIS Supreme Court is quite unlikely to defend the interests of individuals against the interests of the oligopolists. The conservatives have stacked the Supreme Court with ideologues Roberts, Thomas, Alioto and Scalia and the lower courts with-get this-activist conservative judges. Kennedy, the supposed pragmatist, has aligned himself solidly with the obvious ideologues. The principal problem with ideologues in this institution is that decisions based on an ideology considered logically prior to the Constitution itself (“original intent” ideology in this case drives the reading of the Constitution rather than the other way around) result in outcomes that contravene the obvious intent of the founders as expressed in such other documents as the Federalist Papers.
To me, it seems that the fourth estate, the press (TV, Radio, Print, Internet), must reform itself and the voices of reason must find a way to deliver a complex message in simple form without regard to the WHOLE truth. I forget who said this, but it’s worth paraphrasing, “Anyone who wants to tell truth and be heard will have to learn to tell in in less than 25 seconds.”
And, we must look to the abolitionist movement of the early 18th century and the civil rights, universal suffrage and labor movements of the late nineteenth and early-to-mid-twentieth century for guidance. Somehow, reasonable people must learn to act unreasonably.
Tom Frank gets a lot exactly right and engineer27’s quote from one of his books is classic Tom Frank. Good choice! Btw, why is Frank’s assessment so “exactly right”?
Disclosure and transparency is a necessary component of counteracting the power of moneyed special interests,but, it’s not sufficient. There must be powerful financial disincentives to behave in destructive ways (“716” may be an example, if Taibbi’s story is accurate).
Economist Robert Frank points out (“Falling Behind”) that conservatives have been able to persuade too many people that what is good for me is good for America taken as a whole. Identifying selfishness with the principal of the greatest good for the greatest number has been a stroke of genius in the battle to win the hearts and minds of the ideological middle. Thus, the slogans, “Greed is Good!” and “It’s YOUR money!” give us permission to stop worrying about the welfare of others – outside of a small circle of friends, of course – because it’s the right thing to do. This amazingly stupid doctrine has carried the day to the extent that acting for the greater good is generally considered “the wrong (read “counterproductive”) thing to do.
As Robert Reich has pointed out in his blog (and you pointed out the blog), nothing serious, i. e., nothing structural, is going on here. And, nothing will until enough people are able to see the conservative tent revival for what it is – empty promises and made up stories.
Mike Konczal here at new deal 2.0 describes how the anti-incumbent movement on the left in Arkansas actually had a meritorious effect on actual policy and negated some effects of campaign money.
“The historical pattern tells us unequivocally that reform must come from the ground, but, it must bypass the states, counties and municipalities on the way up and go directly to Congress or the federal Courts.”
While you are right to see things as welling up from ground level, I think it would be wrong to see an authentic “peoples’ moment” as concerned with congresses or courts in any way. When it comes, it will sweep away congresses and courts and, with a logic of its own, start all over again. I’m guessing, but I’d see a second constitutional convention as coming out of such spontaneity. I’d also see the detention and public trial of the political and lobbyist trash that made it all necessary.
election reform suggestion: only allow contributions from residents of the district of the election. Representatives could only raise money from residents within their district and Senators could only raise money from residents within their state. This would go a long way toward reducing the cost of elections and the influence of big business. Same restrictions for PACs and corporate campaign advertising.
I think that the solution is to replace hopelessly corrupted elections altogether by completely reinterpreting what “democracy” means, in a deep sense.
Agreed, a good start would be one term for everyone, no chance to be reelected to anything (so hold House elections every year, for half the house members).
Then, standardize campaign finance – i.e. ban all private expenditure on campaigns, ban all campaign advertising, mandate networks to televise for free a series of debates between opposing candidates for every race, with standard debating rules written into law.
A compensation for holding office of X, and a bonus of 5X, the bonus to be held in trust.
Bonus to be paid 5 years after leaving office, to the top 50% of political figures, as ranked by the public, for their perceived performance. (Forfeited by those who go through conflicted-out public/private revolving doors).
And life in prison for any public official who allows bribery to corrupt his/her judgment.
In summary, rig the system in favour of the interests of private citizens, not banksters and their politician cronies. Surely, that is what democracy and freedom are all about?
Same wavelength, George. Same wavelength.
Everyone should read Kaiser’s book, Tom Frank’s books (What’s the Matter with Kansas” and “The Wrecking Crew: How Conservatives Rule”), and watch the Frontline episode that recounts Brooksley Borne’s (sp?) attempts to have the CFTC (or somebody!) regulate financial derivatives. Then, consider the case of West Virginia coal miners by comparing and contrasting their political behavior, today, with their political behavior 100 years ago.
Today, these miners are staunch conservative Republicans who support the very interests who are victimizing them economically and even killing them (since negligent homicide is considered murder and can be prosecuted criminally, we could say that the mining companies are murdering their employees). 100 years ago, coal miners and copper miners fought for the right to unionize and bargain collectively at great personal cost to themselves and their families. The unionization of miners would not have succeeded without the intervention of the federal government to protect their right to strike without fear of physical and economic reprisal, and the legacy of vastly improved safety management would not have endured without the resulting institutions to oversee mining practice.
The mining community is particularly puzzling. Current miners are direct descendants of the miners who fought so hard for the right to bargain as a group. What has happened here during the past 40 years? How have they been persuaded that the very same groups who tried to crush their union and to block creation of the institutions that are designed to protect them are bad for them? Most important, how can this outcome be reversed?
Military brass is well aware of HOW the phenomena of “arrested development” can be strategically deployed.
In France, the coal miners were allowed to climb out of the dark holes and build nuclear power plants. Okay, the issue of nuclear “waste” has not been totally solved, yet, but if everyone is “arrested” from solving the problem – the infamous “no soup for you” schtick – then it will never get solved.
Where is Ms. Born these days…? For anyone still not convinced about the EXTREME censorship in play, consider the total black-out of media when it comes to Ms. Born.
Moyer’s site is in lock down…no more conversation there…of course, first they flooded the site with spammers to make it appear as if a “moderator” was needed…
Here’s my list of what got “arrested” in a small town now totally owned by “retired” mercenaries (they even privatized the taxpayer-built city airport…):
1. solar energy array
2. educational (science) TV on a local station
3. small business packaging clinical trial supplies (that “idea” went to India – a country known for it’s cleanliness..)
4. small business (local community college talent) providing high-spec ceramics
And not only do they say “no” to picking yourself up by your bootstraps, they utilize the 40 “churches” for a whisper campaign among the “moms” who make Sarah Palin look like a genius compared to the really stupid stuff they make up,
they have SECRET access to the “network” of BIG banks (there’s no community bank left in town) and so they are able to hook up the pharisee-hose and suck you dry – shut off electricity and water before due dates, post total LIES on the screen that comes up for all the hooligan telemarketers at the mortgage company to spin at you…it’s a never-ending NIGHTMARE…
McCarthyism was high school compared to what getting on their SECRET lists is like today with “technology”…yikes! And now there’s so many more lists – anti-gay, anti-hispanic, anti-“church”, anti-capitalism, etc. etc. etc. – everyone jumped on that politically correct “anti-semite” bandwagon to work it for themselves…the only anti-wha’ever that is not being employed is anti-“feminist”…go figure…
That’s how it’s done – “devil in the details” – coal miners can’t ignore the “details” of how to do their work because they’ll die…but the “details” NOW are about arresting development…
There is a direct relationship between the atonement doctrine and selfishness…see German/Russian history for how churches were infiltrated by “fascists and kulaks”…”god wants you to suffer”…next week’s sermon – “god wants you to be rich”, next week’s sermon “god needs blood sacrifice”…
I’ve yet to see any country that embarks on more government deliver fairness, transparency and competence.
It is very interesting to read responses to this blog on a daily basis. I was telling a female friend of mine the other day about it, and we got off on a discussion of what politics was and what it has become. She was remarking that this republic was founded by great and good men who wanted to escape British tyranny and have valid representation if they were to pay taxes. I agreed and then went on to explain that we have moved a full 360 degrees. We now pay taxes for oligarchic despotism that actually puts to shame the British who taxed their colonies without allowing them representation. I also explained that the “founding fathers” were not so saintly, reminding her of the fact that all creatures that were not wild, white, male and human were still under tyranny in America following the resolution. Women, slaves and all others (including farm animals) were considered to be owned by the white male population as chattels.
We are rapidly approaching a far worse condition. The general populace is very close to becoming chattels of the Great American Plutocracy, since now we are all owned by the monied interest. Listen to Tennessee Ernie Ford’s classic piece “16 Tons” and think about your lives. If you aren’t an oligarch, you are owned.
Bayard, thanks for such an insightful comment.
As a Brit, who is in the process of getting US residency, I find the contrast between both fine countries endlessly fascinating.
As it happens I’m back in London just at the moment so this comparison with my new home in Az is especially acute.
I swing between two places:
Strongly agreeing with your premise that the whole western world (western used loosely) is rapidly descending into a particularly nasty period with major social unrest a strong possibility, and;
That the openness that the new technologies now provide (Blogs and the whole gamut of social media) will create such upward pressure from good, decent, thinking citizens that politicians will have to take note and act accordingly.
That’s why the coalition result in the UK has been so interesting – this just maybe the tipping point. In the sense that party politics in the UK and USA wasn’t working, and hadn’t for a long time.
If the UK Government, which for the first time in decades represents a substantial majority of voters, does set an example to the rest of the world, it would be a rather poetic re-run of the past exodus from the old country to the new, albeit in a virtual sense.
The Declaration of Independence set in motion a return to COMPETANT and NORMAL people interacting with the bigger “forces” – nature, if you will.
This is nothing other than another insane
(doing the same thing over and over again and expecting a different result)
episode of thieves consuming the FRUITS of other people’s labor which began in the 20th century.
Trying to do it “virtual” makes if even mor einsane.
Reminds me of that Star Trek episode where Picard gives Moriarty his own “black box” in which Morairty can exist in a world of his own creation as a hologram. Actually a perfect solution in the current situation of virual vs real…merciful, too, to institutionalize the “virtuals” (perception is reality)
instead of pitchforking them :-)
Small government is best only until it’s not. Too few bank examiners or overseers from the SEC to properly supervise the financial sector. Too few food safety inspectors to insure the purity and safety of the food supply. Too few safety inspectors to watch over the oil and gas industry. The result: the current mess in the Gulf of Mexico, e coli deaths from tainted meat and lettuce, and, of course, with the complicity of both major political parties, beginning with Reagan and continuing through the so-called New Democrats under Clinton, then the two terms of profligacy and corruption under Bush II, the federal government slowly allowed its influence to be undermined by the neo-conservatives and other more blatantly right-wing forces. And now with the rise of full-time 24/7 demagoging on Fox News, the potential ascendancy of a completely fascist and racist right-wing. As Simon Johnson has pointed out many times, whether this administration has the courage and power to stand up against Wall Street and the big banks as FDR did in the 30s will determine the future of the country for a generation or more. It’s total war now, and it looks like the big banks and the Wall Street Titans are winning hands-down. I just pray that the President can discover his backbone soon. He’s the only real force which can change things for the better. If he loses this battle with BIG MONEY interests, it’ll be too bad for ordinary citizens, who will henceforth only be referred to in our society as “the consumer sector.” Hope this doesn’t happen, but it’s not looking good from where I sit now.
Unfortunately, this is a reductive idea. A modern techno-industrial state cannot be run by amateurs. Term limits laws have had an almost universal negative unintended result: increased influence of lobbyists and industry insiders who are the only ones left with the technical expertise to write complex legislation. This has absolutely happened in California.
Roy, Lobbyists having been writing the legislation that gets passed for years. Most of our legislators are lawyers, not engineers or other technically trained people, so I don’t see that there would be a lot of difference.
Your stats suck, they look nice but they suck.
“In 1974, the average winning campaign for the Senate cost $437,000; by 2006, that number had grown to $7.92 million. The cost of winning House campaigns grew comparably: $56,500 in 1974, $1.3 million in 2006.”
The increase looks big but it’s less than 10% annually, that and the link doesn’t work.
“Or look at the lifetime contributions by the financial sector to (some) senators who voted for and against the Brown-Kaufman amendment, which would have imposed a hard size cap and a hard leverage cap on the biggest banks – over $2 million per senator by this one partial count.”
To have an accurate portrayal of the situation you must compare contributions of senators who for the amendment with those that voted against.
Not that I disagree with your overall premise, but trying to validate an opinion with one sided statistics is shameful.
10% annually seems like a lot to me when compared to the growth of incomes in all but the top decile of earners, to annual GDP growth, to annual job growth and to many other measures during this same period. Public and private college and university tuitions have grown at about 10% annually since the early 1970s. Is that ok with you, too, Joe? Oh, and what if violent crime, the cost of food and transportation had grown at 10%? Is that ok, too?
Also, the passage about Brown-Kaufman that you quoted actually referred to looking at those senators who voted for and against it, so what’s your beef? Btw, the link works. I just tried it, and it lists senators from both voting groups.
10% growth is substantial but not monumental. Further when you factor in monetary inflation $437,000 in 1974 is about %1,700,000 in 2006. Work that out over 32 years you get less than 5%. Also consider the growth of the federal government. Proportioned against federal spending I imagine the cost of a senate seat has actually gone down over that time period. And I repeat that I do agree with the implication that special interest groups are purchasing influence, I just don’t like the numbers used, for rather than being a good indicator of comparable growth they are merely a scare tactic. I call them a scare tactic as the general public will look at the vast difference between the two numbers and conclude disproportionate growth to be taking place. Trying to sway public opinion with reasoned argument is admirable, but trying to sway public opinion through manipulation disguised as reasoned argument is wrong. This is the way of Fox News, it is not the way intelligent people should behave.
As for Brown-Kaufman the same arguments apply. The general public sees $2,000,000 and thinks “Holy crap that’s a lot of money”. A reasoned argument would be a comparison of donations received between those who voted against and those for. This would also have to be in a relevant time span, including donations from 20-30 years ago is against reason as they can not reasonably be considered a current influence. To validate the purchased influence opinion the conclusion should show a positive correlation between relevant donations(current financial sector) and no votes.
As for the link I was referring to the one immediately following the 1974-2006 quote. I imagine you just didn’t see it. It’s small I don’t hold it against you, but please don’t reply to me we are obviously not on the same playing field.
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