THE BLOG

It's the System, Stupid

01/25/2008 11:48 am ET | Updated May 25, 2011

I woke up this morning missing Molly Ivins. But there
was no need. I soon realized that I could still hear
her voice in my head, and she was calling out as if
from a great distance.

"It's the system, stupid!" I believe she was saying.
And it is, too.

I know Hillary and Barack are all involved in the
"horse race" or "dog fight" or whatever they want to
call it, but if they were paying attention to the real
situation, this is what they'd find.

The US: superpower and supermarket of the world, lies
at the nexus of three collapsing systems. The first is
our system of campaign finance and by extension,
government itself.

When pushed by that pushy guy, John Edwards, in one of
last summer's debates, Hillary defended corporate
lobbyists with the plaintive line, "lobbyists are
people too."

Technically this is true. We're all people, but to be
fair, corporate lobbyists are a special class of
persons. Generally we label these kinds of people as
"parasites." This is because they not only live off
the blood and money of the rest of us, but their
parasitic engagement with the system ruins it, makes
it ultimately inoperable for any purposes but their
own.

Like their patron saint, Darth Vader, many corporate
lobbyists were once your elected representatives
working for -- achievable -- change in the system itself.
They worked themselves to the bone trying to pass
legislation to make the world -- a little -- better, while
continually trying to raise money to get reelected,
until they finally got worn down. Then they took the
golden handshake and joined the other side. In
retirement from public service many corporate
lobbyists get very, very rich.

And let's be honest, given the opportunity you might
well do the same.

The results of the lobbyists gaming the system with
their campaign contributions, however, have been
disastrous. Whether or not legislators can take the
lobbyists money and still vote against them, the cost
of campaigns has escalated in the past decade alone,
even more than the cost of elite colleges. This has
made most legislators slaves to campaign contributions
and the lobbyists who provide the lion share of them.

The obvious answer is public financing of campaigns.
And of course, most corporate lobbyists don't want
that because public financing would spell the end to
their out-sized power. The tightening nexus of media
conglomerates also don't want it, because they want to
continue to be able to charge a fortune for campaign
ads. You can see where this is going.

Meanwhile the international financial system is
literally crumbling before our eyes. The business
press has decided that the ongoing collapse of the
financial system -- though they don't call it that, they
call it "the recession" -- is due to the "subprime
mortgage meltdown."

While the bad, collateralized mortgage debt madly
circulating through the financial system is certainly
the initial cause of the credit crunch at the root of
the current crisis, it is also a symptom of the larger
malady.

The underlying sickness that plagues the country is
the hegemony of the finance economy over all other
aspects of society and the human political economy.

The finance economy rose with the decline of
manufacturing in the late '70s and early '80s. In
these years the stock market went on a run that
ultimately increased the total of corporate investment
and theoretically, worth, by over 15-fold, from
1981 until today.

What made this massive increase in the size of the
finance economy possible was the good old U.S. consumer.
Instead of buying American goods manufactured here, we
now bought foreign goods -- and domestic real estate --
financed by a new homegrown American product, cheap
commercial credit and debt, produced for us by
American banks like good old Citicorp, J.P Morgan
Chase and the rest of them.

In fact, even as most of our real incomes declined we
bought -- directly and indirectly -- more debt than we
could, collectively, ever afford to repay. Many of us
bought the credit debt because we needed to, just to
keep our heads above water. Others of us bought debt
so we could live like "the Kings and Queens of
antiquity," all on a white-collar, wage-slave salary.
Others bought the debt so they could speculate with it
and try to game the system themselves. But we all
bought it.

Not so strangely, what was going on among individual
consumers was recapitulated on an enormous scale in
the financial world at large. The names of the kinds
of transactions changed over the years, from Leveraged
buyouts to the more recent CDO's -- collateralized debt
obligations, but it was all about the buying and
selling of debt.

As it turned out, this was a very good business and
led to the creation of a small, but not insignificant,
new class of rich and super rich.

The enormous new pools of financial wealth also
enabled the corporate financial elite to hire all
those damn lobbyists.

Typically, the actual work of these corporate
lobbyists -- when they are not busy eating away at the
integrity of the legislative system itself -- is
advocating for a regime of less regulation in the
markets.

There are many examples of their successes; the
deregulation of power and electricity companies that
led to the rise of Enron, is one.

In 2005, we saw the new anti-bankruptcy law, in which
the credit card companies, while keeping their ability
to charge usurious interests rates, took away the
refuge of Chapter 11 bankruptcy from ordinary
Americans.

In 1999, the banking and insurance industries, after
years of campaigning against the 1933 Glass-Steagall
Act which kept them out of the incredibly lucrative
investment markets, finally got the so called
"firewall" legislation removed.

Once the banks went into collusion with the big
investment firms, it was Katie bar the door; anything
could be turned to an investment security, or
"instrument" as the industry put it. And so we got the
dicing up and bundling of these impossible to "rate"
mortgage securities that are the cause of the current
panic.

Now, the chickens are coming home to roost. The Big
Banks and Big Investment houses have lost billions
upon billions of dollars. They need to re-capitalize
and fast, so they are bringing in new investment from
the so-called sovereign wealth funds; government
investment funds held by nations in Asia and the
Middle East.

What the SWF's have in common is that they represent
countries that have actually been producing goods and
materials while the U.S. has been mostly been busy
making debt. In many cases these countries have
literally been subsidizing our debt orgy in order to
keep us flush enough to keep buying their stuff. But
now the gig's up. The American finance economy is
running aground and the producing nations are being
forced to tip toe in -- to take us over.

Frankly, they don't have a choice.

However, besides the loss of American national
sovereignty, there is an even deeper problem endemic
to the finance economy.

This is because the third system in collapse is "the
big one," the ecological system of the planet itself.

Even when the market is functioning as it should,
management still has to answer to shareholders whose
main concern is maximizing their investment. In the
case of public or private companies with a lot of
leveraged debt -- and there's a lot of them -- there is a
certain desperation to the search for immediate
profits. However from the standpoint of the planet and
its survival, maximizing return is not the first issue
that needs to be addressed.

We should be talking about these things. It is an
election year after all, but I think we're not talking
about it, because there are certain politicians who
must know that they are implicated in the looming
crises that hover about us.

Exhibit number one: The Clintons.

As President, Bill Clinton pushed trade deals like
NAFTA that both shipped jobs out of the country and
rewarded the new financiers for their support. He
signed the Gramm-Leach-Briley law that repealed most
provisions of the Glass-Steagall act. He presided over
the deregulation of the power and electric industries.
He actively encouraged corporate lobbying in exchange
for campaign contributions.

It's hard to say what goes in the mind of the
Clintons' so that Hillary feels she can blithely
ignore this history, pretending she is a candidate of
change when in fact she is the very embodiment of a
malignant status quo.

Molly Ivins saw it. In her January 20, 2006 column,
she wrote:

"I'd like to make clear to the people who run the
Democratic Party that I will not support Hillary
Clinton for President. Enough. Enough triangulation,
calculation and equivocation. Enough clever
straddling, enough not offending anyone. This is not a
Dick Morris election... "

From my perspective, which admittedly is not the
perspective of most Democrats, John Edwards is
probably both the most electable candidate and the one
who attacks the predations of the system most
directly.

As Russ Feingold pointed out last week, Edwards is a
flawed candidate. However that doesn't alter the fact
that Edwards is currently the most eloquent spokesman
we have against the influence of corporate money in
politics and for the vanishing American Middle Class.
He's the only credible anti-corporate voice in the
race.

The big problem with Edwards' candidacy is it may no
longer be viable. Edwards may be the most electable
Democrat for a general election, but I don't see how
he gets from here to the nomination.

Nonetheless, I'll be voting for John Edwards when my
primary day arrives on February 5th. Edwards does take
some votes from Obama, but I would submit that he
takes more votes from Hillary and at this point,
stopping Hillary is job one for Democrats.