FacebookTwitterGoogle+RedditEmail

The Washington-Wall Street Kabuki Dance

by SHELDON RICHMAN

When I watch the public furor over the ruling party’s attempt to “toughen” regulations on the financial industry, I get the same feeling I often have in a theater: Good show but it’s not real.

There’s something eerily ritualistic about the current occupant of the White House berating Wall Street for its irresponsibility and proposing new regulations, while his targets send a swarm of lobbyists to Washington to keep the regulatory overhaul from getting out of hand. (History says they’ll be on good terms with the regulators in any case.)

I’m reminded of the late great  Walter Karp’s book Indispensable Enemies. These apparent adversaries need each other.

This may sound outrageous. In what sense could it be said that the advocates of new financial regulation and the big financiers are on the same side? In this sense: Neither side would wish the other to disappear. Each is integral to the existing political economy (call it what you will), and neither would want it to change in any significant way. They are “indispensable ‘enemies.’”

Roderick Long has it right when he says,

“We might compare the alliance between government and big business to the alliance between church and state in the Middle Ages. Of course it’s in the interest of both parties to maintain the alliance — but all the same, each side would like to be the dominant partner, so it’s no surprise that the history of such alliances will often look like a history of conflict and antipathy, as each side struggles to get the upper hand. But this struggle must be read against a common background framework of cooperation to maintain the system of control.”

We have a system that’s a mix of government and “private” control. (It’s not truly private because the control entails force-backed guarantees, barriers to entry, and the like.) But it’s an unstable mix. Sometimes those who want more formal government control get the upper hand, while at other times those who want more “private” control elect their people to office. So the mix can change. What doesn’t change is that some mix of the two will exist, as opposed to an unalloyed political economy based on freedom and free exchange. The battles are at the margin.

As Long writes elsewhere, the people who run the system con the public by portraying the marginal disputes as fundamental struggles. What’s really an internecine argument over where to move the line is represented as a monumental battle between Unfettered Capitalism and Enlightened Progressivism, or some such pair of misleading terms. Long writes,

“Corporate liberalism functions via a façade of opposition between a purportedly progressive statocracy and a purportedly pro-market plutocracy. The con operates by co-opting potential opponents of the establishment; those who recognise that something’s amiss with the statocratic wing are lured into supporting the plutocratic wing, and vice versa. Whenever the voters grow weary of the plutocracy, they’re offered the alleged alternative of an FDR or JFK; whenever they grow weary of the statocracy, they’re offered the alleged alternative of a Reagan or Thatcher. Perhaps the balance of power shifts slightly toward one side or the other; but the system remains essentially unchanged.”

This is why the alleged radical Barack Obama can be elected president and we still find economic policy in the hands of establishment “corporate liberals” Larry Summers, Tim Geithner,  Paul Volcker, Christina Romer, Ben Bernanke, and Robert Rubin. You could see it coming, though: Obama got more Goldman Sachs-connected money than John McCain in 2008.

There’s been some controversy lately over whether it is appropriate to call the Obama administration a “regime.” It’s appropriate in my view so long as you’re also willing to talk about the Bush and Reagan regimes. But what we really should be talking about is “the permanent regime,” the underlying system that endures despite changes in White House occupants.

If you have doubts about any of this, imagine some top Wall Street operator calling for elimination of the Federal Reserve System and the banking cartel it administers. Imagine him endorsing repeal of all federal and state banking regulations and their replacement with free banking and market-based money. Imagine him testifying on behalf of an end to all implicit guarantees, bailout promises, and the “too big to fail” doctrine. If you can’t imagine it you have begun to grasp the nature of the actual political economy in which we live.

The latest financial crisis cannot have had roots in the free market because no free market has existed in finance, banking, or housing for a very long time. Its roots rather are in the government-business management of money and banking, and the political agenda imposed on a willing mortgage industry (among other things). So prevention of another crisis can hardly be found in new regulation by unaccountable bureaucrats who will necessarily lack the knowledge required to modulate risk systemwide without stifling innovation and progress.

Wall Street acted according to the incentives generated by the corporatist political system. That’s why it’s so absurd for Chris Dodd, Barney Frank, and Andrew Cuomo (among others) to stand in judgment of Wall Street. They were principals in creating the incentives that made recklessness appear rational and even compatible with the political agenda being pursued. Yet they continue to occupy perches of power.

Wall Street’s blame lies not in behaving according to the incentives created by Washington – what should we have expected? — but in actively supporting a cartelized financial system that feathers its nest at the people’s expense while sheltering it from the disciplining gales of free and open competition. A coherent, sophisticated, and liberty-oriented populist response would consist of a repudiation of Washington and Wall Street.

SHELDON RICHMAN is editor of The Freeman magazine, where this piece also appears, a senior fellow at The Future of Freedom Foundation, and author of Tethered Citizens. Visit his blog “Free Association“. Send him email: sheldon@sheldonrichman.com.

 

WORDS THAT STICK

More articles by:

Sheldon Richman, author of 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.  He is also the Executive Editor of The Libertarian Institute.

January 17, 2018
Seiji Yamada
Prevention is the Only Solution: a Hiroshima Native’s View of Nuclear Weapons
Chris Welzenbach
Force of Evil: Abraham Polonsky and Anti-Capitalist Noir
Thomas Klikauer
The Business of Bullshit
Howard Lisnoff
The Atomized and Siloed U.S. Left
Martha Rosenberg
How Big Pharma Infiltrated the Boston Museum of Science
George Wuerthner
The Collaboration Trap
David Swanson
Removing Trump Will Require New Activists
Michael McKinley
Australia and the Wars of the Alliance: United States Strategy
Binoy Kampmark
Macron in China
Cesar Chelala
The Distractor-in-Chief
Ted Rall
Why Trump is Right About Newspaper Libel Laws
Mary Serumaga
Corruption in Uganda: Minister Sam Kutesa and Company May Yet Survive Their Latest Scandal
January 16, 2018
Mark Schuller
What is a “Shithole Country” and Why is Trump So Obsessed With Haiti?
Paul Street
Notes From a “Shithole” Superpower
Louisa Willcox
Keeper of the Flame for Wilderness: Stewart “Brandy” Brandborg
Mike Whitney
Trump’s Sinister Plan to Kill the Iranian “Nukes” Deal
Franklin Lamb
Kafkaesque Impediments to Challenging Iran’s Theocracy
Norman Solomon
Why Senator Cardin is a Fitting Opponent for Chelsea Manning
Fred Gardner
GI Coffeehouses Recalled: a Compliment From General Westmoreland
Brian Terrell
Solidarity from Central Cellblock to Guantanamo
Don Fitz
Bondage Scandal: Looking Beneath the Surface
Rob Seimetz
#Resist Co-opting “Shithole”
Ted Rall
Trump Isn’t Unique
January 15, 2018
Rob Urie
Democrats and the End(s) of Politics
Paul Tritschler
Killing Floor: the Business of Animal Slaughter
Mike Garrity
In Targeting the Lynx, the Trump Administration Defies Facts, Law, and Science Once Again
Thomas Hon Wing Polin
Hong Kong Politics: a Never-Ending Farce
Uri Avnery
Bibi’s Son (Or Three Men in a Car)
Dave Lindorff
Yesterday’s ‘Shithole Countries’ Can Become Classy Places Donald, and Vice Versa
Jeff Mackler
Lesser Evil Politics in Alabama
Jonah Raskin
Typewriters Still Smoking? An Interview with Underground Press Maven John McMillan
Jose-Antonio Orosco
Trump’s Comments Recall a Racist Past in Immigration Policy
David Macaray
Everything Seems to Be Going South
Kathy Kelly
41 Hearts Beating in Guantanamo
Weekend Edition
January 12, 2018
Friday - Sunday
George Burchett
Wormwood and a Shocking Secret of War: How Errol Morris Vindicated My Father, Wilfred Burchett
Roberto J. González
Starting Them Young: Is Facebook Hooking Children on Social Media?
Jeffrey St. Clair
Between the Null and the Void
Andrew Levine
Trump After Bannon: What Next?
John Davis
Mud-Slide
Ajamu Baraka
The Responsibility to Protect the World … from the United States
Robert Hunziker
Global Warming Stirs the Methane Monster
Paul Street
Lazy Liberals and “the Trump Effect”
Carmen Rodriguez
Trump’s Attack on Salvadoran Migrants
Mike Whitney
Oprah for President, Really?
Francisco Cabanillas
The Hurricane After Maria
FacebookTwitterGoogle+RedditEmail