Saturday, January 23, 2016

Be Careful What You Ask For

I


This announcement in the New York Times today may excite some people, but if you have any grasp of the perfidy that subsumes our banking and financial system, you will need to throw notions of meaningful, structural reform out the window with this candidate. Mr. Bloomberg, is, no doubt, a dedicated public servant and a self-made man, starting his company with $10 million received in a settlement after the acquisition of Salomon Brothers in the early 80's. He has created a large and successful, profitable, privately held company. Some would say, he made his money the old-fashioned way, played by the rules and delivered a valuable set of technologies and services to a rapidly growing financial sector in need of innovation. He has also done some very important philanthropy work domestically and internationally and is a man of serious talent and political acumen.

However, there is a school of thought which posits that our financial system is a virtuous dynamo that despite its flaws, serves mankind well. Quixotic storytelling and analogies abound to offer justification....we just need to tweak it and we'll get it right. A deeper study, in my view, reveals that this is errant rationalization for a broken and irrational system, which actually serves a few well and is unable, due to its inherent logic, to manage the problem of scarcity, one that plagues mankind more seriously every day. Historical cycles of debt bubbles with privatization of profits and socialization of debt, a trend of dropping wages and soaring profits with the finance sector enabling the export of jobs and the creation of profitable debt instruments (like the current student debt bubble on the back of the mortgage bubble) are commonplace.  This is not simply the result of poor management, rather it is an inherent characteristic of our economic system. Public Radio devotes hours of publicly paid air time to shows like Market Place, combining hipster-millenial cool-speak with news of financial markets, when in fact the large mass of the citizens who pay for public radio have no meaningful participation in it. This can be seen on public television as well, where the Koch Brothers and other billionaires have become patrons, narrowing the range of perspective that can be offered to the public. You will find no challenge or critical analysis, (save the occasional Front Line piece after a crisis), on our publicly owned airwaves.

The notion of "free markets" and the "natural" process of capital flows are anything but their namesakes, yet these disguised notions are so ingrained in our minds that we skip over the deep contradictions of our economic system; one that is largely based on corporate socialism. If socialism is to be used as a pejorative in the public square, let's first be clear about definitions and study the nature of it in its massive corporate form: guaranteed corporate subsidies, protectionist trade-renamed "free," grotesque tax loopholes, war profiteering, deregulation of the banking system with the public burden of paying down private debt falling on the backs of taxpayers during the bust end of a business cycle. All the while the profits, taxed at very low rates and sometimes not at all, go into private pockets during the booms. The European Union embraced our "magic" and the results speak for themselves. On the other hand, as long as the US commands reserve currency status around the world, the political system is unlikely to feel the pressure that should arise from the long suffering of a debt-laden population, working their asses off just to stay above water while scratching their heads at more wars and huge profits as corporate our media continues to sell fear with the defense sector that pervades almost all congressional districts doing their part to drive the juggernaut.

The choices we have in national politics are of grave concern to many, and it is easy to see a "moderate" entering the race as a breath of fresh air, but let us be careful about what the word moderate really means during these times and what more status quo in the financial sector is likely to bring, or not bring. Could Mr. Bloomberg defy conventional wisdom and bite the hand that has fed him over three decades? Anything is possible, but we need to look deeper before placing our bets.

The notion that Mr. Bloomberg is prepared to take on a program of restructuring our banking system seems a leap of fancy. We have arrived at a peculiar place in history, where history itself may offer no guide. The questions that come to mind for this writer are those posed in Plato's Republic, where we attempt to extol the virtues of the trusted philosopher king in leading a great republic. It is possible that we have reached a point where we are simply too big to govern (California alone is the 7th largest economy in the world). Having a self-financed billionaire win the presidency is certainly not a trend toward greater democratization of our idealized republic.

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