10 Ways Our Democracy Is Crumbling Around Us
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9. The Revolving Door
Democracy is also in peril when financial personnel slide back and forth between Wall Street and Washington. It’s an unwritten rule that the top Treasury officials must come from Wall Street in order to “reassure” markets. Hank Paulson, Bush’s Treasury Secretary, formerly served as the CEO of Goldman Sachs. Tim Geithner, Obama’s Treasury Secretary previously was the head of the New York Fed, which is considered the informal board of directors for Wall Street. These officials truly believe that what’s good for Wall Street is good for the country.
For example, while Paulson was misleading Congress and the media about the dire situation at Fannie and Freddie in 2008, he then rushed to New York to tell his hedge fund buddies (who once worked for him at Goldman Sachs) that Freddie and Fannie soon would be nationalized. That secret tip was worth hundreds of millions to those hedge funds which then shorted the stocks and made a killing. Paulson obviously believed that the nation was served better by speaking truthfully to the oligarchs while lying to our democratic leaders.
Then there’s Peter Orzag, the former Obama budget director, widely known as a deficit hawk. Orzag was in government throughout the bailout period and was intimately involved in pouring hundreds of billions of dollars into failed banks like CitiGroup. Two years later Orzag leaves his high-level government position to take a multi-million dollar job with...CitiGroup.
Meanwhile congressional members, staff and civil servants also have their eyes glued on lucrative financial jobs in the very industries that are supposed to control in the name of the public good. Some already are auditioning by spending their time in Congress managing their own investment portfolios. Staff members are behaving like day traders.
This is what the ugly transition from democracy to oligarchy looks like.
10. Worshiping the Market Gods
Perhaps the biggest danger signal comes with the growing worship of financial markets. For nearly 3,000 years there has been an uneasy tension between money-lenders and governments of all kinds. But until recently government usually held the upper hand. Not so today. The financial markets have more power than ever before, and every political leader knows it. That power translates into the anthropomorphic qualities assigned to markets which now have a range of human emotions: Markets “approve or show their displeasure;” become “jittery or remain calm;” and “show concern or provide support.” They can take down governments, cause debt crises and generally veto policies that get them “uneasy.”
How bad is it? Just think about when the rating agencies – the petty apostles of Wall Street -- reduced their ratings on U.S. government debt last summer. Politicians and the media actually took them seriously. How crazy is that? These same rating agencies turned tricks for Wall Street banks and mis-rated thousands of mortgage-backed securities leading up to the crisis. They are the walking embodiment of abject failure and they should have gone under along with their mis-rated securities.
Instead, when the deficit discussion was mounting in Washington, these same rating agencies had the gall to cut U.S. debt ratings….and we took them seriously? The “markets” sure didn’t because interest rates remained at record lows. Yet, pundits asked, “What must we do to get our AAA rating back?” They should have been asking: “How much do those rating agencies owe the American people for damage they did to the economy and how do we get it back?”
Is It Too Late for Democracy?
The game’s not over yet. We still have freedom of expression and the right to protest – more or less. Occupy Wall Street both showed how the debate could be altered, and how easily the authorities could end the encampments. So, it’s an open question whether we have the will to build and sustain a broad, powerful anti-Wall Street movement.