Taibbi's Scream: Stop the Political System That Has Let Goldman Sachs Fleece Us for 90 Years
Continued from previous page
Despite the fact that our news media have been filled with financial stories from Bear Stearns failure in March '08 to the present, the elements listed above seem neglected, muted, or in short supply (Gretchen Morgenson is the exception that proves the rule). This is disturbing, particularly given the scale of losses that the taxpayer has been forced to absorb, along with disappearing funds for future roads, bridges, health care, schools and a tax drag on wealth creation. It is into the void created by the tepid media coverage of this horrid and costly episode that Mr. Taibbi has screamed.
There is an age-old tension that emerges in situations like this. You can feel it yourself. We know things are not right but do not exactly know why. Finance is complex. Since the progressive era, trust in "experts" has often been suggested as the best way for society to handle such complex phenomena. We are encouraged to delegate to the likes of leading academics, the Federal Reserve, the Treasury Secretary, and financiers themselves to keep an eye on the public interest. Public officials are explicitly employed to undertake this task on behalf of society. Those in the private sector often appeal to experts, encouraging public deference to their superior knowledge. Experts are thought to be the custodians of the nation's health.
As theologian Reinhold Niebuhr once described in Moral Man and Immoral Society:
"The stupidity of the average man will permit the oligarch, whether economic or political, to hide his real purpose from effective control .... Since the increasing complexity of society makes it impossible to bring all those who are in charge of its intricate techniques and processes, and who are therefore in possession of social power, under complete control, it will always be necessary to rely partly upon the honesty and self-restraint of those who are not socially restrained."
The problem now is that the experts and leaders from finance have failed us miserably. They have let us down and we know it. We do not trust in the system. No one thinks the Federal Reserve did a bang-up job in the years preceding this crisis. The failure is much more profound in the private sector, yet for the most part that failure goes unacknowledged. Even with losses and bailouts, we have to fight over bonus payments to those who feel entitled, despite the cost they have imposed on their stockholders and, more importantly, society.
What we are witnessing, as I have written elsewhere, is a perverse form of insurance pay off.
Let's call it political insurance. Ordinarily when insurance is offered, a premium is paid and, over time, the provider of insurance sets the rate on the premium so that they make a bit of money despite periodic payouts for accidents. What we have here is different. The financial sector, and other large patronage donors, spend billions of dollars on lobbyists and campaign contributions. Politicians then run their expensive election marketing campaigns with the proceeds. And finally, the contributors buy downside loss protection from the politicians and their appointees.
Who provides that downside protection? You and me. The taxpayer. The body politic. We get used by this refracted process, and our system is mislabeled as a representative democracy. And, to add insult to injury, we are forced to endure the the horror of the awful marketing campaigns of politicians using the their payoff money to protect donors with our the tax base. The media is on the take, too, collecting advertising revenue from financial companies and from political campaigns. Far be it for them to step outside this circular flow of funds that impedes our political system from incorporating feedback from evidence of its own dysfunction.