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Larry Abrams

Larry Abrams

Posted: January 25, 2008 11:48 AM

It's the System, Stupid


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.