FacebookTwitterGoogle+RedditEmail

Wall Street Couldn’t Have Done It Alone

by SHELDON RICHMAN

The spreading Occupy Wall Street movement, despite a vague worldview and agenda, properly senses that something is dreadfully wrong in America. The protesters vent their anger at the big financial institutions in New York’s money district (as well as other big cities) for the housing and financial bubble, the resulting Great Recession, the nonrecovery, the threat of a second recession, and the long-term unemployment — which averages over 9 per cent but hits certain groups and areas far more severely than others.

The protest is understandable, even laudable, but there’s something the protesters need to know:

Wall Street couldn’t have done it alone. The protesters’ wrath should also be directed at the national government and its central bank, the Federal Reserve System, because it took the government or the Fed (or both) to:

create barriers to entry, for the purpose of sheltering existing banks from competition and radical innovation;

then regulate for the benefit of the privileged industry;

issue artificially cheap, economy-distorting credit in order to, among other things, give banks incentives to make shaky but profitable mortgage loans (and also to grease the war machine through deficit spending);

make it lucrative for banks — and their bonus-collecting executives — to bundle thousands of shaky mortgages into securities and other derivatives, knowing that a government-licensed rating cartel would score them AAA and that government-sponsored enterprises Fannie Mae and Freddie Mac and other companies would buy them;

insure deposits so that individual depositors had no need to worry about the risks their banks might be taking;

inflate an unsustainable housing bubble by the foregoing and other methods, enticing people to foolishly overinvest in real estate;

work closely with lending companies to establish a variety of programs designed to lure people with few resources or bad credit into buying houses they can’t afford;

attract workers to the home-construction bubble, setting them up for long-term unemployment when the bubble inevitably burst;

implicitly guarantee big financial companies and their creditors that if they got into trouble they would be rescued;

compel the taxpayers to bail out those companies and creditors when the roof finally did fall in.

No bank or group of banks could do these things on its own in a freed market. It requires a government–Wall Street partnership — the corporate state — to create such misery and exploitation. The corporate state is nothing new in American history. Politicians across the spectrum have long instituted policies that benefit big banks and big business generally, and they have dressed those policies either in free-market (Republicans) or progressive (Democrats) rhetoric to lull the people into acquiescence. The result is an overgrown government that bestows privileges on the well-connected and then regulates on their behalf. The rest of the population pays and suffers.

Many participating in Occupy Wall Street sense this, but they need sound economic theory and economic history to see fully who the adversary is. Wall Street couldn’t have done it alone. Greed without political power is boorish. Greed with political power is dangerous.

So demonstrators, you are right. Something is dreadfully wrong. But your list of culprits is far from complete. So go ahead and protest outside Goldman Sachs and Bank of America. But also spend time (as a few already have) outside the White House, the Fed, the Treasury, and the Capitol Building. Together they are responsible for our current economic woes. These are the entities that control our fate and over which we have no real say. This is not how America was supposed to be. It’s time for things to change.

The freed market — embodying individual freedom and autonomy, voluntary social cooperation, and peace — is the alternative to the corporate welfare-warfare system you properly despise. All you have to do is discover it.

Sheldon Richman is editor of The Freeman, senior fellow at the Future of Freedom Foundation, and an advisory board member of the Center for a Stateless Society. He is  author of Tethered Citizens: Time to Repeal the Welfare State. Visit his blog “Free Association” at www.sheldonrichman.com. Send him email.

Sheldon Richman, author of the forthcoming America’s Counter-Revolution: The Constitution Revisited, keeps the blog Free Association and is a senior fellow and chair of the trustees of the Center for a Stateless Society, and a contributing editor at Antiwar.com

More articles by:
Weekend Edition
July 01, 2016
Friday - Sunday
Andrew Levine
Hillary: Ordinarily Awful or Uncommonly Awful?
Rob Urie
Liberal Pragmatism and the End of Political Possibility
Pam Martens
Clinton Says Wall Street Banks Aren’t the Threat, But Her Platform Writers Think They are
Michael Hudson
The Silence of the Left: Brexit, Euro-Austerity and the T-TIP
Ismael Hossein-Zadeh
Marx on Financial Bubbles: Much Keener Insights Than Contemporary Economists
Evan Jones
Ancillary Lessons from Brexit
Jason Hirthler
Washington’s Not-So-Invisible Hand: It’s Not Economics, It’s Empire
Mike Whitney
Another Fed Fiasco: U.S. Bond Yields Fall to Record Lows
Aidan O'Brien
Brexit: the English and Welsh Enlightenment
Jeremy R. Hammond
How Turkey’s Reconciliation Deal with Israel Harms the Palestinians
Margaret Kimberley
Beneficial Chaos: the Good News About Brexit
Phyllis Bennis
From Paris to Istanbul, More ‘War on Terror’ Means More Terrorist Attacks
Dan Bacher
Ventura Oil Spill Highlights Big Oil Regulatory Capture
Ishmael Reed
OJ and Jeffrey Toobin: Black Bogeyman Auctioneer
Ron Jacobs
Let There Be Rock
Ajamu Baraka
Paris, Orlando and Turkey: Displacing the Narrative of Western Innocence
Pete Dolack
Brexit Will Only Count If Everybody Leaves the EU
Robert Fantina
The First Amendment, BDS and Third-Party Candidates
David Rosen
Whatever Happened to Utopia?
Andre Vltchek
Brexit – Let the UK Screw Itself!
Jonathan Latham
107 Nobel Laureate Attack on Greenpeace Traced Back to Biotech PR Operators
Steve Horn
Fracked Gas LNG Exports Were Centerpiece In Promotion of Panama Canal Expansion, Documents Reveal
Robert Koehler
The Right to Bear Courage
Colin Todhunter
Pro-GMO Spin Masquerading as Science Courtesy of “Shameful White Men of Privilege”
Eoin Higgins
Running on Empty: Sanders’s Influence on the Democratic Party Platform
Binoy Kampmark
Who is Special Now? The Mythology Behind the US-British Relationship
Mark B. Baldwin
Russia to the Grexit?
Andrew Wimmer
Killer Grief
Manuel E. Yepe
Sanders, Socialism and the New Times
Franklin Lamb
ISIS is Gone, But Its Barbarity Still Haunts Palmyra
Mark Weisbrot
A Policy of Non-Intervention in Venezuela Would be a Welcome Change
Matthew Stevenson
Larry Cameron Explains Brexit
Cesar Chelala
How Tobacco Became the Opium War of the 21st Century
Joseph Natoli
How We Reached the Point Where We Can’t Hear Each Other
Andrew Stewart
Skip “Hamilton” and Read Gore Vidal’s “Burr”
George Wuerthner
Ranching and the Future of the Sage Grouse
Thomas Knapp
Yes, a GOP Delegate Revolt is Possible
Gilbert Mercier
Democracy Is Dead
Missy Comley Beattie
A Big F#*K You to Voters
Charles R. Larson
Mychal Denzel Smith’s “Invisible Man, Got the Whole World Watching: a Young Black Man’s Education”
Barbara Nimri Aziz
Four Morning Ducks
David Yearsley
Where the Sidewalk Ends: Walking the Bad Streets of Houston’s Super-Elites
Christopher Brauchli
Educating Kansas
Andy Piascik
The Hills of Connecticut: Where Theatre and Life Became One
June 30, 2016
Richard Moser
Clinton and Trump, Fear and Fascism
FacebookTwitterGoogle+RedditEmail