America—American society and ruling elite—needs some good, old common sense New Year’s Resolutions. To me, three seem pretty much to sum it up: transparency, responsibility, and regulation.
It is only common sense that a democracy cannot function if officials are allowed to hide what they do from those who hired them; no powerful official can for long resist the temptation in a dark closet to do something he has good reason to hide: the solution is to turn on the lights. Taking responsibility for your behavior is understandable to any well-bred three-year-old. Again, this is common sense: who will consistently behave responsibly when told they do not have to? Finally, not only do most of us fall short of sainthood, there is always a truly evil person in every crowd. For him certainly, but also just to help guide the rest of us to stay on the straight and narrow, it is, once again, only logical that we need regulation.
Transparency by those in power allows democratic political oversight and trains the elite to behave responsibly, while regulation reinforces responsibility. A century ago Lenin won a revolution with the famous slogan “peace, bread, land.” That was a slogan capturing the essence of what Russians thought they should receive from their government. Today, in the U.S., the issue is not about what government should give people but about how the elite that runs both government and corporate power centers behaves. Put briefly, an elite that behaves transparently and accepts responsibility for its actions would revolutionize America but could continue to exist; such an elite would be compatible with democracy. Absent such a revolutionary change in behavior, either the elite or democracy must give way.
Four years after the entirely man-made 2008 financial crisis, the carefully concealed government program that rescued both the financial system (justifiable) and the millionaire crooks who almost broke it (unjustifiable) is only now leaking out into the public realm
. Someday, a politician must be put on public trial and ordered to explain why bailing out the rich with taxpayer funds should be hidden from the taxpayers.
Lack of Financial Regulation
…thanks largely to the fact that credit default swaps existed in a totally unregulated area of the financial universe—this was the result of that 2000 law, the Commodity Futures Modernization Act, sponsored by then-senator Phil Gramm and supported by then-Treasury chief Larry Summers and his predecessor Bob Rubin—Cassano could sell as much credit protection as he wanted without having to post any real money at all. So he sold hundreds of billions of dollars’worth of protection to all the big players on Wall Street, despite the fact that he didn’t have any money to cover those bets. [Matt Taibi, Griftopia, (Speigel and Grau Trade Paperbacks, 2011), 101.]
Who led the fight to keep taxpayers in the dark? Naturally, it was the Fed, that so-called Federal regulator complicit in the creation of the financial crisis by its cosy (read: “
as in, “
t forget to give me a nice Wall Street management position after my years in the government, now, good buddy”
) relationship with those it was assigned to regulate plus…
the banks it was supposed to have been regulating. This is really not very hard to understand: if you were a billionaire who became a billionaire by cheating investors by persuading them to purchase what you knew to be bad investments and the government handed you free money from the pockets of American workers after you got in trouble, wouldn’
t you want to keep it secret?!? To find out what Washington was doing with taxpayer money behind the backs of taxpayers, Bloomberg had to file Freedom of Information requests!
What was the bottom line?
banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates
Either the Fed was so irresponsible and just plain stupid that it threw away $13B of taxpayer money or…this constitutes outright corruption.
…in Foreign Affairs. Two countries today are responsible for generating a decade-long crisis that could provoke a disastrous war, perhaps even a nuclear war, by their game-playing over the concept of nuclear transparency: Israel and Iran. Regional nuclear monopolist Israel plays the “don’t ask-don’t tell”charade, while Iran appears to be playing exactly the game that got Saddam killed: pretending for short-term status to have the ability to militarize nuclear technology overnight. Both Tel Aviv and Tehran need to grow up and support regional nuclear transparency as the first step toward the establishment of a shared security regime.
As for Washington, it should–as sole superpower–defend the interests of mankind and–as the elected government–defend U.S. national security: both obligations would be better served by promoted stability founded on mutual security than by getting into the middle of a squabble between foreign politicians playing games for personal advantage. Yes, moves to lower regional tensions would put the careers of Ahmadinejad and Netanyahu at risk. So what?
…in Domestic Affairs.
When corporations are either 1) permitted
by a society that provides them a business-friendly environment to enrich themselves or 2) are even assisted
by corporate welfare to enrich themselves and their business behavior subsequently endangers the welfare of society, then that society must have a legal process for holding such corporations as entities and the managers of such corporations and their government friends personally responsible. Goldman Sachs executives, despite appearing to have engineered the collapse of AIG only to profit further from that disaster via a monstrous taxpayer bailout [Taibi, 118; Nouriel Roubini and Stephen Mihm, Crisis Economics
(Penguin Books: 2010), 228-9], remain free and rich while the millions who have lost homes and jobs remain homeless and unemployed.
Responsibility in Financial Affairs
Even though they weren’t really in danger of losing any money by holding on to [WM: AIG executive] Neuger’s securities, they were returning them anyway, just to force AIG into a crisis. [Taibi, 116] …In essence, the partners of Goldman Sachs held the thousands of AIGpolicyholders hostage, all in order to recover a few billion bucks they’d bet on [WM: AIG executive] Joe Cassano’s plainly crooked sweetheart CDS deals. [Taibi, 118.]
…in Foreign Affairs.
The war party infamous for the savaging of Iraq, Lebanon, Gaza, Somalia (using Ethiopian troops), Afghanistan, Pakistan should be held legally responsible in open court not only for what it did to foreigners but for the resultant American deaths and the harm to American principles. Were crimes committed (e.g., lying to the American people about the reasons for invading Iraq, illegal wiretapping, Abu Ghraib, war against civilian populations in such places as Fallujah)? Let the system of justice reach a decision. Throwing a rug of political denial over the rotten foundation of American democracy is not the way to prepare for the future.
Responsibility in Foreign Affairs
At the height of what looked like success in Iraq and Afghanistan, American officials fretted endlessly about how, in the condescending phrase of the moment, to put an “Afghan face” or “Iraqi face” on America’s wars. Now, at a nadir moment in the Greater Middle East, perhaps it’s finally time to put an American face on America’s wars, to see them clearly for the imperial debacles they have been — and act accordingly.
…in Domestic Affairs. In 2010 a meek and vague new financial regulatory bill was signed into law, leaving the crucial details to be determined by the very regulatory foxes (e.g., in the Fed) whose irresponsibility and collusion brought us the financial crisis in the first place. We are being conned.
Regulation in Financial Affairs
We are now in the worst of all worlds, where many TBTF institutions have been bailed out and expect to be bailed out in any number of future crises. They have as yet faced no sustained regulatory scrutiny, and no system is in place to put them into insolvency should the need arise. Even worse, many of these institutions—starting with Goldman Sachs and JPMorgan Chase—are starting to engage once more in “proprietary trading strategies,”…[Roubini, 224].
…in Foreign Affairs. Regulation is relevant to foreign policy in two ways: the establishment of international law, which U.S. presidents have shamefully made careers out of violating in recent years, and domestic efforts to hold politicians to account for the foreign policy they implement. Regarding the latter—the idea of holding senior officials personally responsible for their foreign policy actions–the most egregious trend is the rising ability of the President to make war without the consent of Congress. (Yes, there is something in the Constitution about this.)
What Could Obama Do?Everyone, conservative or liberal, is now aware that Obama has yet to respond to the hopes of Americans for a savior to rescue the country from the combination of the neo-con orgy of empire and government-facilitated financial crime. Yet he can yet become an above-average president in his first term, opening the door to greatness in his second. No, he does not have the power to pass significant new laws; any conversation he has with Republicans in 2012 will be doomed to failure; the stumbling gait of the elite-crippled American giant gives him little power to change the world. All this is sad but true.
Nevertheless, Obama is President. He has the power to defend the 99%. He can, for example, urge the Attorney General to start seriously investigating both corporate crime and corrupt politicians who were either on the take to corporations or exploiting their positions for private gain. There is plenty of time before Election Day to bring some of the obvious suspects–who wrote laws to facilitate bank fraud and then bailed their buddies out or who invaded other countries on false pretensions–to trial. That is just an example. It comes under the heading “Responsibility.”
One of the greatest failures of the Obama Administration was the absence of a clear, public denunciation of the recent practice of giving the finger to international law, a crucial shield defending democracy. Obama does not need an act of Congress to stand up before the American people and speak to us of the principles conducive not to the long-term security of the U.S. empire but of American democracy. Lying to the American people about the reasons for war, making nuclear threats against non-nuclear powers, advocating preventive war as a regular policy option, hiring mercenaries and pushing open-ended authorizations for unilateral presidential action to facilitate presidential wars without Congressional declarations of war are great ways to defend the militarist heart of an imperial garrison state; they are not so good for defending the security of a democratic society of free citizens. This is just a second example; it comes under the heading “Regulation.”A great President is one who will inform the naïve American people that he too must bow before the law; in a word, like those of us who elect the President, he too must be regulated, and a great President would wish to leave behind such a legacy.
The U.S. Government needs three New Year’s Resolutions: transparency, responsibility, regulation. If Obama wants to lead the U.S. proudly into the 21st century, he can start now.