FacebookTwitterRedditEmail

The Washington-Wall Street Kabuki Dance

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 Coming to Palestine, 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.

bernie-the-sandernistas-cover-344x550
December 05, 2019
Colin Todhunter
Don’t Look, Don’t See: Time for Honest Media Reporting on Impacts of Pesticides
Nick Pemberton
Gen Z and Free Speech
Bob Lord
The U-Turn That Made America Staggeringly Unequal
Josh White
The Most Important Election in British History
Daniel Warner
The Hillsborough Soccer Tragedy: Who is Responsible?
Dean Baker
The Big Deal in Warren’s Prescription Drug Plan
George Ochenski
Another Utility Disaster Headed Our Way
Binoy Kampmark
Spying on Assange: the Spanish Case Takes a Turn
Victor Grossman
Big Rallies and Big Differences in Germany
L. Ali Khan
A Playboy Misrules Pakistan
William J. Astore
How American Exceptionalism is Killing the Planet
Susie Day
The Mad Activist Impeaches Western Culture
Andrés Castro
Look Out for the Drift
December 04, 2019
Jefferson Morley
RIP Fred Hampton: a Black Visionary Assassinated by the FBI
Vijay Prashad
Wealthy Countries’ Approach to Climate Change Condemns Hundreds of Millions of People to Suffer
Kenneth Surin
The Tory Election “Campaign” to Date
Maria Paez Victor
Indians Shall Not Govern
Peter Lackowski
Bolivia’s Five Hundred-Year Rebellion
Dave Lindorff
Billionaire Entitlement Run Amok: the Case of Michael Bloomberg
Doug Johnson Hatlem
Is Corbyn for Christmas Just Another Stove Pipe-Dream?
Howard Lisnoff
Elizabeth Warren: Savior of a Fallen System?
Robert Fisk
The Remembrance Poppy is Becoming a Weapon Against Immigrants to Canada
Dean Baker
NAFTA was About Redistributing Wealth Upwards
Richard Greeman
French Unions and Yellow Vests Converge, Launch General Strike
Binoy Kampmark
Legitimised Surveillance: Kim Dotcom’s Case Against GCSB
Walter Clemens
Goodbye Law and Morality, Welcome Pretend Tough!
Sam Pizzigati
Football Without Billionaires? Why Not?
Anthony Giattino
Royal Forests of America
December 03, 2019
Richard Lachmann
Can the US Get Out of Its Endless Wars?
Ramzy Baroud
Israel’s Unfinished ‘Coup’
David Rosen
The Dialectics of Postmodern Sexual Identity
Robert Fisk
Reporting Syria: I Talked to Everyone, Except Assad
Patrick Cockburn
Why the Resignation of Iraq’s Prime Minister May Not Stop the Mass Uprising on the Horizon
Norman Solomon
For Corporate Media, It’s ‘Anybody But Sanders or Warren’
Bob Scofield
Uruguay Turns to the Right
Joe Emersberger
Talking About Ecuador’s Political Prisoners: an Interview With Marcela Aguiñaga
Medea Benjamin
Trump Was Right: NATO Should Be Obsolete
Nyla Ali Khan
Lesson in Diplomacy for India’s Consul General Sandeep Chakravorty
William Gudal
The Bubble Machine
Gaither Stewart
Dirty Hands
Peter Certo
End the Wars, Win the Antiwar Vote
Binoy Kampmark
The Liveris Formula: Dow’s Inclusive Capitalism
Dan Bacher
California Freezes New Fracking Permits – But All Oil Drilling Permits Still Outpace 2018
Kay Sather
Can’t Get No Satisfaction?
December 02, 2019
Rob Urie
Ukraine, the New Cold War and the Politics of Impeachment
FacebookTwitterRedditEmail