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.

Will Falk moved to the West Coast from Milwaukee, WI where he was a public defender.

Like What You’ve Read? Support CounterPunch
July 30, 2015
Jeff Taylor
Iowa Conference on Presidential Politics
July 29, 2015
Mike Whitney
The Politics of Betrayal: Obama Backstabs Kurds to Appease Turkey
Joshua Frank
The Wheels Fell Off the Bernie Sanders Bandwagon
Conn Hallinan
Ukraine: Close to the Edge
Stephen Lendman
What Happened to Ralkina Jones? Another Jail Cell Death
Rob Wallace
Neoliberal Ebola: the Agroeconomic Origins of the Ebola Outbreak
Dmitry Rodionov
The ‘Ichkerization’ Crime Wave in Ukraine
Joyce Nelson
Scott Walker & Stephen Harper: a New Bromance
Bill Blunden
The Red Herring of Digital Backdoors and Key Escrow Encryption
Thomas Mountain
The Sheepdog Politics of Barack Obama
Farzana Versey
A President and a Yogi: Abdul Kalam’s Symbolism
Norman Pollack
America’s Decline: Internal Structural-Cultural Subversion
Foday Darboe
How Obama Failed Africa
Cesar Chelala
Russia’s Insidious Epidemic
Tom H. Hastings
Defending Democracy
David Macaray
Why Union Contracts are Good for the Country
Virginia Arthur
The High and Dry Sierras
Jon Langford
Mekons Tour Diary, the Season Finale, Mekonception in Redhook
July 28, 2015
Mark Schuller
Humanitarian Occupation of Haiti: 100 Years and Counting
Lawrence Ware
Why the “Black Church” Doesn’t Exist–and Never Has
Peter Makhlouf
Israel and Gaza: the BDS Movement One Year After “Protective Edge”
Carl Finamore
Landlords Behaving Badly: San Francisco Too Valuable for Poor People*
Michael P. Bradley
Educating About Islam: Problems of Selectivity and Imbalance
Binoy Kampmark
Ransacking Malaysia: the Najib Corruption Dossier
Michael Avender - Medea Benjamin
El Salvador’s Draconian Abortion Laws: a Miscarriage of Justice
Jesse Jackson
Sandra Bland’s Only Crime Was Driving While Black
Cesar Chelala
Effect of Greece’s Economic Crisis on Public Health
Mel Gurtov
Netanyahu: An Enemy of Peace
Joseph G. Ramsey
The Limits of Optimism: E.L. Doctorow and the American Left
George Wuerthner
Bark Beetles and Forest Fires: Another Myth Goes Up in Smoke
Paul Craig Roberts - Dave Kranzler
Supply and Demand in the Gold and Silver Futures Markets
Eric Draitser
China’s NGO Law: Countering Western Soft Power and Subversion
Harvey Wasserman
Will Ohio Gov. Kasich’s Anti-Green Resume Kill His Presidential Hopes?
Jon Langford
Mekons Tour Diary, Episode 4, a Bowery Ballroom Blitz
July 27, 2015
Susan Babbitt
Thawing Relations: Cuba’s Deeper (More Challenging) Significance
Howard Lisnoff
Bernie Sanders: Savior or Seducer of the Anti-War Left?
Martha Rosenberg
Big Pharma’s Profiteers: You Want Us to Pay What for These Meds?
Joshua Sperber
What is a President? The CEO of Capitalism
John Halle
On Berniebots and Hillary Hacks, Dean Screams, Swiftboating and Smears
Stephen Lendman
Cleveland Police Attack Black Activists
Zoe Konstantopoulou
The Politics of Coercion in Greece
Patrick Cockburn
Only Iraq’s Clerics Can Defeat ISIS
Ralph Nader
Sending a ‘Citizens Summons’ to Members of Congress
Clancy Sigal
Scratch That Itch: Hillary and The Donald
Colin Todhunter
Working Class War Fodder