Friday, November 17, 2017

Obama Standing up to Wall Street: Fact or Fiction?

An interesting bit of news-reporting from the time of the Obama Administration sheds light on business and government: “What haunts the Obama administration is what still haunts the country: the stunning lack of accountability for the greed and misdeeds that brought America to its gravest financial crisis since the Great Depression. There has been no legal, moral, or financial reckoning for the most powerful wrongdoers. Nor have there been meaningful reforms that might prevent a repeat catastrophe. Time may heal most wounds, but not these. . . . After the 1929 crash, and thanks in part to the legendary Ferdinand Pecora’s fierce thirties Senate hearings, America gained a Securities and Exchange Commission, the Public Utility Holding Company Act, and the Glass-Steagall Act to forestall a rerun. After the savings-and-loan debacle of the eighties, some 800 miscreants went to jail. But those who ran the central financial institutions of our fiasco escaped culpability (as did most of the institutions). . . . The weak Dodd-Frank financial-reform law that rose from the ruins remains largely inoperative, since the actual rule-writing was delegated to understaffed agencies now under siege by banking lobbyists and their well-greased congressional overlords. . . . Rather than purge the crash’s crimes, Wall Street’s leaders are sticking to their alibi: Everyone was guilty of fomenting this “perfect storm,” and so no one is. Too-big-to-fail banks are bigger than ever, and ­Masters of the Universe swagger is back.”

Analysis:

 The hegemony of the moneyed interest in any republic renders the public weal subject to a plutocracy—rule by wealth. In the wake of the credit crisis of 2008, U.S. Senator Richard Durbin of Illinois observed that the banking lobby still owned Congress even as the public regarded the banks as at least partially culpable for the crisis. Durbin made his remark after the Senate defeated his amendment that would have allowed foreclosure judges to modify mortgages in trouble. Even though mortgage companies had written steep interest rate hikes into the subprime mortgages that the mortgage writers must surely have known the borrowers could not afford, the servicers stood by the vaunted sanctity of contract doctrine—a faithfulness conditioned, no doubt, by the article serving their interests. Financial influence over elected representatives enabled the U.S. Government to provide cover, or at least to refrain from going after the financial institutions that had been so culpable. That government also refused to break up the banks too big to fail, whose very concentrations of wealth, increased by the TARP program, stood even more as systemic risk.

 Historically, Americans have looked to independently-minded occupants of the U.S. Presidency to stand up to powers of the day to protect the viability of the states. Andrew Jackson, for example, stood up to the moneyed interest before his reelection in 1832 in depleting the Second National Bank of the United States of funding (the bank ended in 1836). Doubtless Jackson spent many nights before the election worried that standing up to money might cost him the election. Of course, he won and enjoyed distinct respect.

 I suspect that Barak Obama did not enjoy respect in the wake of the credit crisis precisely because he did not stand up to the banking lobby. Relatedly, he caved to the demands of the health insurance industry lobby that he no longer push for a public option and resist a mandate for guaranteed customers. I suspect that people sense a lack of political courage and recalibrate their respect accordingly. The political weight of such a collective judgment at the ballot box is an open question; the reward such as Jackson received in 1832 is likely more certain even as it is thought less. Herein occupies the political trap wherein the path of least resistance may gain the upper hand in a president’s political calculation. Faith in the people rewarding courage against concentrated interests can be difficult to embrace even as such reward is perhaps germane to the office as it was designed and intended. Americans seem to innately know this, even as their collective judgment is difficult for politicians to discern.

 In the want of a Jacksonian presider standing for the public weal against being overrun by the private moneyed interest, the historical answer would have been to look to normative, even religious, constraints. Frank Rich includes this type among the more contemporaneously popular legalistic and economic ones where he writes, “There has been no legal, moral, or financial reckoning for the most powerful wrongdoers.” Even so, he concentrates on government regulation as essentially the only means available to constrain the unrepentant greed of Wall Street. Historically, ethical constraint against greed was thought to depend on religious, and specifically Christian, auspices. Frank Rich’s focus alone may be read as rendering a verdict on the efficacy of Christian ethics in countering the fundamental desire for more. Yet how many Jackson’s have the States seen that we may rely on presidential leadership and any ensuing regulation to constrain the moneyed interest?  Moreover, what if greed is so entrenched in human nature that virtually any bulwark must ultimately be found wanting?  


 Source:

 Frank Rich, “Obama’s Original Sin,” The New Yorker, July 3, 2011.

Related essay: “Godliness and Greed

The Tail Wagging the Dog: Congress under the Influence

Congress may be like a drunk, unaware that it is being handed one drink after another by vested interests oriented to legislation with specific financial objectives. On February 28, 2010 on CNN’s State of the Union, Nancy Pelosi, Speaker at the time of the U.S. House of Representatives, said that the health insurance companies didn’t want a government-financed and operated "public option" for American citizens, so it was off the table. Her statement resonates with the earlier one by U.S. Senator Richard Durbin just after his forclosure-assistance amendment failed: "The banking lobby owns Congress." That the health insurance companies and Wall Street banks were generally viewed as at least partially culpable even as they still had Congress in their pockets points to a serious corruption in American government.

Even when companies (or an industry) are at fault, they can still call the shots in Congress when their interests are at stake. At the very least, they can encourage diversions that enable them to safeguard planks in legislation that protect their interests. Consider, for example, Representative Dennis Cardoza, a Democrat of California in the U.S. House. The husband of a family practice physician, he is intimately familiar with the failings of the American health care system. His wife “comes home every night,” he said, “angry and frustrated at insurance companies denying people coverage they have paid for.” Even so, he is on the fence on the Democratic health-care reform proposal because he wants stronger anti-abortion language and more cost control. Were he really angry like his wife, he would be pushing for the public option and for real restrictions on the insurance companies, rather than allowing secondary issues to get in the way.

I don’t believe Dennis Cardoza was all that angry at the companies that have been refusing to fuffill their responsibilities to their customers who have paid premiums. Moreover, he was allowing himself to succumb to the self-interested manipulation of the insurance companies that had purported sparked his anger. It is in the health insurance companies' interest that costs are reduced because then their expenses are reduced. If he were really angry like his wife, he would not be so willing to do something that would benefit them so much; rather, he would be working to take power and money away from them by insisting on a public option.

America’s Health Insurance Plans, a lobbyist for the insurers, announced in March 2010 as Congress was considering health-insurance reform that the organization was buying more than a million dollars’ worth of television advertising time in order to "explain" why insurance premiums had been rising. Such a claim of educating the public is a subterfuge behind a financially-induced intention to manipulate public opinion to shape the health insurance law in the interest of the insurers (even as their practices of exclusion had been part of the problem). The week before, the White House had indicated that the industry’s rationale for the raised premiums was unconvincing, but how many people got this information through the din of the lobbyist's commercials?

All too often without realizing it, citizens allow industries to get away with their misrepresentations that are geared to thwart reform. The health insurance industry’s ads convince us that the companies really aren’t sharks; we ignore Sen. Rockefeller’s likening of the companies to sharks—you don’t know there is a shark until you see its fin and feel its sharp teeth. In other words, our anger is too easily (and conveniently…for the sharks) dissipated. In other words, we let the bad kids off the hook and go on as if the problem were somehow no longer out there. This puts the misbehaving kids in a position to thwart any parenting. We ignore the inherent conflict of interest in this scenerio as the kids steer public policy to our detriment.

I suppose it is only natural that sick kids would not feel culpable for their illnesses. Even so, the sick kid sitting on the table in a physician's office does not get to decide on his own treatment even if he or she is from a rich family. If there is an adult in the room, the kid is overruled in his own case and the shot is given over the kid’s objection. In the case of health reform, one might reasonably ask: where are the adults, or are the sick insurers in the driver's seat even as they are on the table?



 Source:

 David M. Herszenhorn and Robert Pear, “Parliamentary Hurdle Could Thwart Latest Health Care Overhaul Strategy,” The New York Times, March 9, 2010.

Thursday, November 16, 2017

Occupying Wall Street: A Self-Regulated Protest?

The right to protest as a manifestation of freedom of speech is held societally as sacred the United States, but the question of how far protest goes before it becomes simply living in a park is one of those gray areas that tend to be decided by the judiciary far from the tarps and sleeping bags. The protesters’ premise that living in a public space eventuates in the achievement of their goals is tenuous where the goals are broad. Undergoing a hunger strike to get a certain anti-corruption bill voted on by India’s parliament is far different than camping out in Zuccotti Park in New York City until corporate capitalism is ended in the U.S. In short, the tactics used should be oriented to the sort of objective being sought. Moreover, the tactics and indeed the objectives themselves require a protest group to self-police such that it does not wander too far off course or spread itself too thin. Protest movements may be too prone to die a slow death from self-inflicted wounds without even the slightest recognition of the cause of death. The Occupy Wall Street protest movement had the capacity to self-regulate, but fell well short of that which was necessary for the group to achieve its anti-corporate goals.

To be sure, the movement evinced some capacity to regulate itself. Faced with the prospect of an imminent clean-up of Zuccotti Park—perhaps a salubrious subterfuge actually geared to permanently dislodging the park’s new residents—some of the protesters scurried around “with brooms and trash bags, moving mountains of sleeping bags, backpacks and jackets out of the way,” according to The New York Times. Meanwhile, others gardened. These tasks doubtlessly tapped into the young protesters’ ideal of working toward something larger than themselves, which they tend to label as “community.”  The impetus on the upkeep was geared to forestalling the park’s owner, Brookfield Properties, from clearing the park a third at a time for a “once-over” by a clean-up crew, after which new rules proscribing camping, tents, tarps and sleeping bags would be enforced. But was it even in the group’s interest to allow camping to become a major issue? Secondly, could the energy of self-regulation have been put to better uses than clean up, given the group’s anti-corporate goals?

Taking the first question first, it should be obvious that occupying a park is not occupying Wall Street. If the protesters were serious on their occupation, they would have sat own in streets in New York’s financial district and blockaded the bank entrances with sit-downs—perhaps even occupying bank lobbies akin to the anti-war protest at Columbia University in 1968. This “actual occupation” strategy would have been more likely to involve the police, but the occupation would have been real—at least for a time. This strategy is distinct from protest marches, which as a strategy could have been an alternative or addition to that of actual occupation of the streets and banks. Allowing the issue to be whether camping takes place in a park can thus be seen as a diversion that is not in the protester’s own interest. Indeed, getting sick by living in a crowded park night after night would also enervate the protest (besides justify the public authorities in clearing the park for public health reasons).

Regarding the second question, the self-regulation evinced by the protesters cleaning up on their own volition can be read as supporting the argument that the protest movement could have policed itself regarding delimiting its topic and presenting a positive image for public relations purposes. Protesters could have volunteered, for example, to make the rounds to eliminate any off-topic signs, such as those for the environment and against the war in Afghanistan. Allowing the protest to be a virtual grab-bag of leftist causes deprived the movement of broader support and gave the opposition ammunition with which to relegate the movement. Even in shifting from an anti-big-corporation message to redistribution undercuts the group’s original anti-corporate (but not necessarily redistributive) goals.

Butting up against the movement’s own efforts to regulate itself was the ideology or illusion that the movement had no leaders. “Every action you see here is autonomous,” one protester said as he was filling plastic bags with trash. “Autonomous enough for people not to be doing it,” another protester added, as reported by The New York Times. That protester went on to describe his “autonomous plan” as if that label itself, and his belief in it, rather than a single-minded aim of ridding American society of large corporations were the main point of him being there.

In other words, the protesters themselves suffered from a lack of priorities and this hurt the attainment of their original anti-corporate goals. Even though the voluntary clean-up effort demonstrates that the movement was capable of self-regulation to delimit and protect the priority of its original, anti-corporate goals, the refusal to delimit the topics (based on the illusion that there were no leaders) and keep the distracting ideologies at bay undercut the group’s self-regulatory potential and ultimately the group’s realization of its anti-corporate goals. Indeed, their lip-service to the contrary, many of the protesters may not have been sufficiently interested in those goals in the first place.

In a letter to the local police commissioner, the chief executive of the property company that owns Zuccotti Park reported that there had been neighborhood complaints of “lewdness, groping, drinking and drug use.” Without self-policing such behavior, the movement risked undercutting its own legitimacy in the eyes of the wider public. Without legitimacy, the movement would face an uphill battle even to be heard. Furthermore, the behavior could be viewed as having an opportunity cost—that of the foregone focus on how to achieve the anti-corporate aims of the movement. Actions speak louder than words; from my vantage-point, it seems that the protesters could have been more devoted to the cause that presumably brought them to Zuccotti Park.

So while it might be fun for young people to relish their “autonomous plans,” get high and camp out with other like-minded people in the zest of life, the refusal of the group to self-regulate itself may have been the seed of the group’s eventual dissolution without the movement having attained its goals—whatever those happened to be. It is an interesting question whether an aggregate of "autonomous plans" can regulate a movement without even a leader as a spokesperson. But why risk "the cause" to find out?

Every group must necessarily have leaders. Whether centralized or decentralized, leadership is part of any organization. Whether accountable or stealth, leadership is there, and whether as spokespersons or committees, leadership is also there. To eschew mechanisms like majority rule and group decision-making so that every person can feel fully autonomous is not only antithetical to there even being a group, it is also at odds with the realization of the movement’s goals, which presumably are necessary means to the greater autonomy being sought outside of a city park.

In short, the protesters undercut themselves from the get-go by wanting too much both ways. They refused to self-regulate their ideology. They would hate reading this, but I suspect that a crucial error of the movement early-on was to give young people too great a role in, yes, running it. Even forestalling necessary decision-making at the group level constitutes a default-decision. In a way, to eschew any leadership at all evinces a puerile or jejune mentality of stubbornness at the expense of one's goal of reducing the impediments to greater economic liberty. This mentality may also have manifested in the failure of the young in the movement to defer to more seasoned leaders. We can do it better ourselves this time and we want it both waysWe don't want ANY limitations. To this mentality, I echo Burl Ives as the snowman narrator of Rudolf the Red-Nosed Reindeer, where he shakes his white head of snow, smiles, and says almost fatalistically, Ah, youth.

In Homer's story of the Trojan War, Achilles' youthful exuberance defers quite uncomfortably to the experience of King Agamemnon; a war led solely by youthful passion would be a mere series of battles. In Lawrence of Arabia, Alec Guinness as King Faisal tells Peter O'Toole as Lawrence to leave the room so the British and Arab leaders can negotiate on Damascus. Some things must be left to old men, the king teaches the youthful warrior with a credible tone of fatalism at the expense of volition. Successful youth are mature and humble enough to know they can't do it all themselves. Successful leaders can then tap into youthful passion and direct it strategically.

Had the Occupy Wall Street movement self-regulated itself beyond cleaning up the park, the group could have enforced and sustained sufficient focus (and thus energy) on the original anti-corporation goals, wherein corporations no longer own Congress and the largest banks and corporations are broken up because of their systemic risk to the financial system, the economy, and representative democracy. The opportunity cost in broadening the movement is sad, particularly as theTea Party could have readily agreed to protest against big business and the banks. That leftist causes, even that of redistribution, were allowed to join the movement out of sheer ideological convenience and an immature refusal to admit the necessity of leadership demonstrates that the self-regulation evinced in the clean-up of the city park did not go nearly far enough for the movement's own good, and that of the republic for which we stand united for life, liberty and the pursuit of happiness.


Source:

Anemona Hartocollis, “Tidying UP, Pre-emptively, But Showdown May Loom,” The New York Times, October 14, 2011.