"We knew what we were doing." It would be easy to describe Dick Cheney's recent assessment of his time in office as the epitaphic bluster of a deeply failed man. But even as we rejoice at the thought of his departure and the arrival of a man in whom we have invested so much hope, let's not forget that the failure of the past decade was a collective one by our leaders in government and business. That Cheney and George W. Bush are criminals who will sadly not be tried does not negate the fact that there are others, many others, including Democrats and members of the incoming administration, who share responsibility for the country's collapse. And let's not lose sight of the fact that, like Cheney, these political and business leaders all think they know what they are doing.
Robert Rubin is an especially significant instance of the "daddy knows best" culture that afflicts political and business leaders, both because of the canonization he enjoyed while in government, and the scope of the collapse he caused while in business. Few illustrate the vile merry-go-round that ties Washington's political establishment with Wall Street than Rubin, who, like Cheney, has hopefully disappeared never to come back. Hailed as the intellectual powerhouse behind the economic boomlet of the 1990s, Rubin was described by Bill Clinton as the "greatest secretary of the Treasury since Alexander Hamilton." Republicans agreed. Perhaps he will now best be remembered as the manipulative powerhouse behind Citibank's dense investment decisions of the past few years. The company is now splintering, even as it haemorrhages $100 million a day despite what has essentially amounted to a nationalization of its operations by the US government. Rubin was of course not alone in the decision-making at Citibank but, with his apparent record of knowing what he is doing, he was listened to by everyone from the old CEO to the new CEO to the board. Yes, it may be that Rubin was not clueless, but simply greedy, cynical, and possibly criminal in his relentless push for horrendous investments that benefited him personally in the short-term. However, the scope of the collapse is such that we have to assume that he really did not know what he was doing. For his part, Citibank CEO, Vikram Pandit, who oversaw the company's disastrous "financial supermarket" model, has reduced his strategic vision to the simple: "We are a bank." Really.
As Barack Obama's brain trust takes on Washington, it should be reassuring that, 15 years ago, one of his chief economic advisors co-wrote a paper called "What Ends Recessions." But it is not reassuring: Christina Romer may think she knows what ends recessions, but many others, equally as educated and experienced, have vastly different theories. And some of them are part of the same economic team that is taking over the White House, and they cannot all be right. To Obama's credit, he is not making things sound simple, and that is a great relief after eight years of blundering clarity. Still, the president-elect has been rather stern about the need for stimulus packages and bailouts of gigantic proportions. Here too, there is disagreement even within Democratic ranks, mostly about the scope and the need for tax cuts. Do not be fooled however: Obama does not know whether this stimulus package, no more than the bank bailout or the auto industry bailout, will succeed, or even if there is a better way. No one does. And it is not good enough to say that something has to be done: we have already dropped $350 billion into the black hole of banking, to be managed by the same idiots who bankrupted the system in the first place. We do not know where this money has gone and whom it has benefited, except for the executives themselves, all of whom are still raking in enormous salaries, and sometimes even performance bonuses (ha!). Rep. Barney Frank, chairman of the House Financial Services committee, does not inspire confidence when he rips the management of the Trouble Asset Relief Program, legislation that he forcefully supported just a few months ago.
It is also not good enough to say, as the Treasury Department recently did, that "it would have been far worse" had the banks not been bailed out through the TARP legislation. Perhaps it would, and perhaps not. They do not know this, and if they do, they have not done a good job at explaining it. That, in fact, is the scariest part of this massive intervention: that any bailout, any stimulus spending will be retroactively justified because "it could have been far worse." This means that these interventions are rushed without much apparent thought, and certainly very little government supervision or the slightest check and balance. And colossal amounts of money are entrusted to the very people who got us here in the first place.
One winner in the Wall Street/DC lottery is Timothy Geithner, Obama's nominee for Treasury Secretary, Rubin's former subordinate, and one of Citibank's prime regulatory overseers in his most recent job as president of the Federal Reserve Bank of New York. How much more incestuous can it get? Yes, there are only so many people "qualified" for the top money job, and presumably they all know one another, having all gone to the same schools and worked at the same financial institutions. This inevitability, though, is precisely why we should be vigilant, and not assume that any of them know what they are doing, or are doing the right thing. With economic policy, it is especially difficult not to trust those in charge, as the issues are complex and, to be fair, most of us are happy to be lulled into complacency. However, it never hurts to question authority and to inquire, no matter how patronized we may feel by the answers or lack of answers. For instance, it is wonderful that SCHIP was the first order of day of the new Congress. It will make a major difference to thousands of children without adequate health care. But why stop there? Surely there could be no more powerful stimulus than to extend health insurance to all Americans and, a couple of trillion dollars of bailouts and stimulus spending later, the money is clearly there. But no, we are told that it is better to build highways than a 21st century health care infrastructure. Why is this? The highways won't be built in a few weeks, nor the bridges, nor the green cars, so why not start now and invest in health care and join other progressive countries in which access to health care is a given, and a major competitive advantage? Again, we will be told that it is an unrealistic, long-term, pie-in-the-sky adventure, but is it really? Whatever the answer of the crew in charge, take it with a pinch of salt.
Foreign policy is another area where a certain kind of expertise is considered crucial, and where the subtleties of international diplomacy and the consequences of warfare are not for everyday citizens to discuss. This is what lead us to Iraq, a murderous trillion dollar folly that was supported by nearly all Republicans and, sadly, a majority of Democratic senators, including Obama's nominee for Secretary of State, Hillary Clinton. We will never know what went through the mind of these Democrats (the Republicans, we know, are mostly morally corrupt imbeciles), and Clinton, for one, has not shouldered the responsibility for her vote. Recall five years ago the massive demonstrations across America against the war, despite intimidation by the government, mainstream media and, yes, our own friends and neighbors. What did those war opponents know that the President, the Senate, and the CIA did not? We would all like to move on from Iraq, but the mission, whatever the hell it was, has not been accomplished. Just as importantly, we do need to look back so that we remember that when the foreign policy establishment tells us they know what they are doing, we should not assume they do. Whether in Gaza, Afghanistan, Iran, Zimbabwe or North Korea, if our policy does not seem to make sense, it is probably because it doesn't.
One of the biggest changes we can hope for over the next four years is a government that is responsive to the needs of most people, as those people see them, not as the political and business leaders see them. Electing Obama was a big, bold, necessary step in the direction of an ethical, competent, responsible government. But it is not sufficient: we need to make sure that we are heard, every day and in every way we know how, so that in four years, after we have all sacrificed for the common good, as Obama has called for, we can be satisfied that while we may not have completely known what we were doing, we did our best. All of us.
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