An honest, non-ideological conversation about our current economic problems requires us to abandon the clichés of “big government” versus “small government”. The real issue is effective government: what should be done and what’s the best way to do it?
We cannot afford a laissez-faire attitude toward the banking sector. Banks cannot be allowed to fail for the simple reason that they can take the rest of the economy down with them. This means that ultimately the public sector (our tax dollars) acts as a final insurer for the private banking sector, and banks know this. Without adequate regulation they will always be tempted to take unnecessary risks, knowing that the federal government will eventually come to their rescue.
The conversation we should be having is how best to ensure that banks are not allowed to take risks of such magnitude that they can undermine the entire credit system, while at the same time allowing them to innovate and provide low cost capital to the general economy. While the details of this balancing act must be left to experts in finance and banking, the basic concept is not beyond the ability of the average voter to comprehend, nor of politicians to explain. There should be zero tolerance for anyone who simply spouts “the markets should be allowed to work things out;” the markets haven’t worked things out, and this line of reasoning ignores the “moral hazard” argument noted above.
On to another topic.
Barack Obama gave what many consider a brilliant speech on race relations in America last week, and it has already gone viral on YouTube. Obama is that super-rare politician who can take a serious liability (in this case an error in judgment) and turn it into an asset through his own rhetorical skills.
What Obama’s speech only hinted at should be the topic for a larger American conversation: the fact that social class and access to power divide us even more than race. Racism surely persists in America, as do sexism and homophobia; but the greatest drivers of American inequality are divisions between rich and poor, between the less educated and the more educated, and between the well-connected and the unconnected.
The millions without healthcare come from all ethnicities and racial backgrounds; coal miners who are dying by the dozens in the Appalachians are poor whites, and they have watched for generations as big coal companies have literally removed the mountains from their communities; the millions of manufacturing jobs that are leaving the Midwest are throwing blacks, white, and Latinos out of work; the corporations who flout all sorts of health and safety laws, aided by a Congress and a court system that caters to their needs above the public interest, do not discriminate in the harm they inflict.
The notion that class is the primary source of injustice in America was recognized by none other than Martin Luther King Jr., who vehemently attacked economic inequality in the last years of his life. While he is revered for his successes in the Civil Rights Movement, his positions on economic fairness and social class were not well received by the mainstream; at the time of his assassination he had lost much of his earlier support.
This is one of America’s “dirty secrets”: it is always in the interests of the powerful for the disenfranchised to fight among themselves for the crumbs (e.g., poor whites against blacks, Latinos against blacks) while those in the chips laugh all the way to the bank. This is not to suggest that there are no grievances with a specific racial or ethnic component, but that these are ultimately secondary to class interests. One doesn’t have to be a Marxist to understand this.
At a time when the federal government is once again bailing out the elite to the tunes of hundreds of billions of dollars, we have a clear choice: we can remain distracted by race, or take a moment to examine the concentration of power in this country and realize how it disadvantages whole swaths of people across all racial and ethnic categories. Greed sees only the color green, and all it really cares about is power.
P.S. Check out Paul Krugman on the topic of financial regulation making lots of sense and raising real concerns. And while I find most of Bill Kristol's columns offensive here I actually somewhat agree with him.