Moyers: Rampant Capitalism Has Created a Social Disaster -- How Do We Right the Ship?
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BILL MOYERS: You're also not enthused about regulation, which is what so many liberals and others are calling for now. Is there some parallel reason for that?
RICHARD WOLFF: Yes. I find it astonishing to hear folks talk about regulation. We regulated after every one of our great panics in the 19th century. By the way, in those years, we were more honest. We didn't refer to a "Great Recession." We used much more colorful language, "The panic of 1857." I mean, that describes what people felt. Anyway, after every one of our panics, crises, recessions, depressions, we have regulated. And the regulations were always defended, first by lower-level officials and eventually by the president and the highest authorities, usually on two grounds. "With this regulation, not only will we get out of the crisis we're in, but," and there was a pregnant pause, "we will prevent a recurrence of this terrible economic dilemma." It never worked. The regulations never delivered on that promise. We're in a terrible crisis now. So all the previous promises about all the previous regulations didn't work. And they didn't work for two reasons.
BILL MOYERS: Yeah, why?
RICHARD WOLFF: Either the regulations that were passed were then undone, or they were evaded. And that's the history of every regulation. During the Great Depression, it was decided, as it has happened again now, that banks behaved in an unfortunate way that contributed to the crisis.
So in the Great Depression, a bill was passed, a regulation called the Glass-Steagall Act, 1933 Banking Act, which basically said, "There has to be two kinds of banks, the banks that takes deposits cannot make risky investments. For that we need something separate called an investment bank. The first thing will be a commercial bank, takes deposits, and we'll make a wall between them."
Okay. The bill was passed. For the banks, this was trouble. This was a problem. They didn't like this. So they spent the first 30 years, 20 to 30 years evading it in a hundred different stratagems. Meanwhile, they began to realize that with some work with politicians, they could weaken it.
And after a while, they decided that even better than evading and weakening, why don't we just get rid of it? And so in the 1990s, they mobilized, led by some of our biggest banks, whose names everybody knows, and they finally succeeded. The Congress repealed the Glass-Steagall Act, and President Bill Clinton signed the repeal.
BILL MOYERS: It was a bipartisan repeal.
RICHARD WOLFF: Right. It's a joke. That allowed the banks to make risky bets with their depositor’s money. Eight years later, our financial system collapsed. It's like a joke. This is a system that creates in the private enterprise a core mechanism and a logic that makes them do the very things that need regulation and then makes them evade or undo those regulations.
BILL MOYERS: You probably saw the recent story that Facebook, which made more than one billion dollars in profits last year, didn't pay taxes on that profit. And actually got a $429 million rebate from you and me and all those other taxpayers out there. GE, Verizon, Boeing, 27 other corporations made a combined $205 billion in profits between 2008 and 2011 and 26 paid no federal corporate income tax. What will ultimately happen, Richard if the big winners from capitalism opt out of participating in the strengthening, nurturing, and financial support of a fair and functioning society?
RICHARD WOLFF: Well, the worst example I just learned about a few days ago. And I got it actually from Senator Bernie Sanders from Vermont. That during the very years 2009, '10, '11, that the federal government was basically bailing out the biggest banks in the United States, they were busily establishing or operating subsidiaries in the Cayman Islands, in the Caribbean, in order to evade taxes.