Hallelujah! The economy is really growing. Our pensions and 401ks are back from the dead. Banks are solvent. Corporations are profitable. Housing prices are stabilizing. Consumer spending is rising. And we may even make some money on the bailouts. [Hallelujah! Goldman Sachs has just been charged with fraud.]]
Granted, unemployment is still frighteningly high, but we've bottomed out and we're told jobs will be coming back soon. Besides, pundits and politicians also tell us the real jobs problem is about education: too many U.S. workers don't have the skills to compete internationally. Fixing that will take a generation or more. So we shouldn't be too worried if the unemployment lines stay long for a few years.
Now that the Dow is shooting past 11,000, Congress has the perfect excuse to pass a pathetic set of watered down financial reforms. The heated arguments between Democrats and Republicans are for political show. The bankers already have won.
And why? Because our tax dollars bailed out their butts. The biggest banks would have gone under, and derservedly so, without our largess. Dow 11,000 is primarily a function of the trillions (not billions) of taxpayer dollars that poured into the biggest Wall Street firms in the form of loans, asset gurantees, liquidity programs and other subsidies. Wall Street then used our money to pay themselves lavish bonuses and to lobby against any and all meaningful financial reforms. (See Bob Kuttner's excellent new book, A Presidency in Peril, for the blow by blow of how crony capitlism really works.)
As a result, Congress has defanged the proposed Consumer Financial Protection Agency and will probably maroon it in the Fed (Why the pretense? Just give it directly over to JP Morgan Chase and Goldman Sachs.) Derivative controls will be weak or nonexistent. Financial loopholes will inspire new leaps of creativity in fantasy financial engineering. Wall Street bonuses will soar to new heights. Hedge fund managers will waltz away with billions, practically tax-free. (They certainly won't be saddled with the financial transaction fees some of us had proposed.) "Too big to fail" will be institutionalized even as the old toxic trash continues to decay on banks' books. (For the definitive account of the travesties contained in the financial reform bill, see Nomi Prins )
All and all, it's a clean sweep for the Bush-Obama team. Paulson, Bernanke, Geithner and Summers (with Robert Rubin, Lloyd Blankfein and Jamie Dimon lurking in the background) have saved the day. The once-in-70-years-crisis is over and we should applaud our saviors. Now at last we can turn to the problems that really keep bankers awake at night: the federal debt and bloated "entitlements" for working people, like Social Security, (unless it is privatized and turned over to Wall Street.)
[ Will the fraud charges against Goldman Sachs postpone the Wall Street victory parade? I'll bet a lot of hedge funds are betting on that right now.]
While the financial community basks in its "recovery," the rest of us are at risk. We still have the worst income and wealth distribution since the 1929 crash (leaving the super-wealthy with plenty of cash to sustain their scary gambling habit). With wealth undertaxed, state and local governments will have to cut wages, benefits and jobs. And our half-hearted and under-funded environmental programs won't be able to halt the biblical plagues of global warming, species extinction and resource depletion. In short, our billionaire bailout society will bumble along as if nothing much happened.
But for how long? When will this house of cards collapse again?
You would think a progressive populist movement would emerge to take on these challenges. Where the hell is it?
Nowhere --at least not yet. Why?
What we're missing most, I believe, is a clear-cut alternative vision. It's worth recalling that FDR didn't dream up the most important elements of the New Deal Radicals of all stripes had been agitating for years--long before the Great Depression started--for legalized unions, work and hour legislation, social security, federal support for housing, steep progressive income taxes, and tough banking regulations. FDR seized upon -or in some cases was pressured into--acting on these ideas. We need that same kind of developmental process right now. Otherwise we are certain to face more economic and environmental mayhem--and we'll never build a sustainable economy.
Of course, there already is a populist movement on the rise: the Tea Party. It, along with the right in general, has a seductively simple platform: "Government Sucks." Progressives have a much tougher task. We need to envision--and evoke for others--a society that enhances freedom and democracy and protects the health and well-being of our people while respecting the environment. So what is our compelling vision?
At the moment, progressives are gathered around many visions, some competing, some complementary. Here are four:
More Stimulus, More Jobs:
Progressive economists lead the charge on this strategy. They say our core problem right now is anemic consumer and business demand in the wake of our burst housing bubble, the financial crisis and catastrophic job loss. To put Americans back to work, they advocate a much bigger stimulus - that is, more Keynesian deficit spending--right now. They say a lot of the stimulus money should go to state and local governments to help solve their Wall Street-induced fiscal crises. That way, we keep public sector workers on the payroll, buying goods and services. The stimulus can, of course, finance green projects and jobs. But the big imperative is just jobs--any and all jobs.
Reindustrialize America:
Some progressives are calling for a new industrial policy to spur the development of modern manufacturing in this country, arguing that manufacturing is the heart of any healthy economy. They cite evidence that manufacturing complexes attract research and development investments, produce higher paying jobs, and create the most bang for the buck throughout the economy. We need to pick winners (like renewable energy technologies) and invest heavily in them, while protecting them from unfair competition. And we need to take on China for cheating on its trade and currency obligations. (See Leo Hindery ) These folks also argue that we need to develop and enforce global labor and environmental regulations to bring up standards and create a more level playing field in the global economy. Industrial unions often favor this approach as the only way to restore decent paying jobs in America.
Democracy, not Plutocracy:
Many progressives believe our core problem is too much financial power, and hence political power, in the hands of the few. They point to our obscene distribution of income and wealth, the inordinate influence of the financial elites over government and policy, and runaway corporate lobbying and electioneering. They believe we've got to break up the big banks, make our taxes much more progressive and pass lobbying/campaign financing reform if we're going to reclaim our country from the financial plutocrats.
Cut Consumption & Save the Earth:
Still other progressives want us to withdraw from the insanities of the market system. They say we should grow our own food, start bartering goods and services, and reduce our personal consumption and carbon footprint. We need to learn how to live with less stuff and stop working all the time. The millions of progressives in this camp are trying to do what they can each day to slow global warming and live lightly on the planet. They don't approve of calls to increase consumption of throw-away products, no matter who produces them. They're not interested in protecting jobs in environmentally harmful industries. They think our focus should be on finding new ways to live in harmony with nature.
Can we reconcile the core truths behind these different conceptions of the future? We'll have to if we're going to build an alternative vision and a concrete agenda that unites us. This is the time for progressive leaders--and all of us--to engage in some serious dialogue about these core issues and how to get them across to our fellow Americans. This is the time to get out of our comfortable niches and beyond our pet projects to talk to each other about what we really want for our country. Until we do, Wall Street will be running the show, no matter who we elect or what they say.
Les Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It Chelsea Green Publishing, June 2009.