Masters of the Universe I: The Questions Neither Obama nor McCain Will Answer

Just how catastrophic is the ongoing financial crisis? In seeking to describe its seriousness, commentators have made repeated analogies to violent natural events, calling it a "financial Katrina," a tsunami, an earthquake.

Indeed these analogies are apt, and not only because of the apparent intensity of this crisis. Much as extreme natural events reveal the underlying climatic or geological dynamics of our planet, this financial shock exposes some basic truths about not only the economy but our form of government. Here I don't mean just the politics and competence of the current administration; rather, I'm referring to the fundamentals of our political system.

What does it mean to live in a democracy when our lives may be so dramatically affected by "the market," in which some of the most powerful players are people we haven't elected and financial institutions in which most of us have little say? When our present and future lives, and even those of our children, may be severely damaged by the storm created by these institutions and facilitated by many of our elected representatives? When our much celebrated freedoms have proved useless to prevent this entirely human-made disaster?

That is the question I would've asked in last night's debate: Is our democracy worth the name?

Consider the events of the last few weeks. The market meltdown that began in the housing market several months ago reached a watershed moment on the weekend of September 12. The heads of some of the country's largest financial institutions converged at the New York Federal Reserve to try to salvage Lehman Brothers, itself a major investment bank; they failed.

The following Tuesday, Bob Lenzner, national editor of Forbes magazine, referred to these best and brightest executives as "masters of the universe." (See Note 1.) This was a somewhat mocking reference to the seemingly all powerful leaders of the institutions which had been ignorant or heedless of the subprime volcano that had been simmering in their balance sheets for years.

Lenzner's description of these individuals as "masters," though a bit contemptuous, is more fitting than he may have intended. This crisis lays bare just how much power they and the institutions they lead exert over our daily lives.

Their actions have brought us to the brink of an economic crisis that threatens not only their own existence but ours. They are affecting our ability to own our homes. They are affecting our ability to find and keep gainful employment, and to retire in comfort after a lifetime of labor. They are affecting our ability to save for our children's education, thereby influencing not only our lives but those of the next generation. They are affecting the ability of our communities to maintain our libraries, parks, and fire departments. (See Note 2.)

In a word, their actions are reducing the pursuit of happiness to the pursuit of economic survival.

This has always been the case more than we usually cared to recognize. The financial crisis has merely exposed this reality and generalized it across the population. It simply makes it impossible to avoid the question of what it means to live in a democracy when such basic aspects of our lives are affected by the actions of others in a manner so completely outside our reckoning. These are people we haven't elected, and institutions which our elected representatives have not only failed to control but have actively aided in their folly.

It may be one of the most positive outcomes of this crisis that it compels us to ask fundamental questions about our political system, questions we may normally be too complacent or polite to ask. What is the true nature of the relationship between the market and our democracy? Do we really have a government by the people for the people? Does the government at its heart and core truly represent our interests? Again, I'm not talking here about this or that administration. Important as this election is, these issues go beyond the outcome of Obama vs McCain.

So, is our democracy worth the name? Let us rephrase the question. If Lenzner's "masters of the universe" really are masters, what does that make the rest of us?

NOTES

1. Listen to the NPR interview with Lenzner.

2. Susan Saulny, "Financial Crisis Takes a Toll on Already-Squeezed Cities," New York Times, October 6, 2008.

Comments

[arlynroyce]

"PLEASE remind your readers that energy flows where attention goes.
PLEASE remind your readers that the more intense emotion, energy, effort and action we take "against" McCain winning, the more likely we are to see McCain win.
PLEASE remind your readers that the more intense emotion, energy, effort and action we take "for" Obama winning, the more likely we are to see Obama win.
PLEASE remind your readers that the more we as individuals and a world blame the powers that be for all our personal problems and look to our "leaders" to make everything better (instead of accepting their own personal responsiblity to do unto others and live as though the world is as it should be).
PLEASE remind your readers that if they REALLY want this world to improve for themselves and their fellow humans, then they should switch the gears. They should take all the time and energy they spend dwelling on how bad everything is, and, instead, spend that same amount of time picturing how great this world and their own daily reality would be with everything better and right and fair and equal and abundant and safe and happy and peaceful and joyous and healthy for us all - the entire human race." Copyright 2008 Enlightainment(TM), Inc. All Rights Reserved.

[metalpipe]

Pollyanna. Not that there's anything wrong with that.

Copyright 2005 Sienfeld and Co. No rights reserved.

Honestly

[arlynroyce]

have a nice day

[sheila]

nice post, but i was disappointed that the crucial issue of LEGALIZED BRIBERY was not front and center. as long as Scalia gets to keep shouting about bribing elected officials being "protected First Amdendment speech" and as long as these corporations enjoy the "rights as citizens," then corruption is inevitable. we need PUBLICLY FINANCED ELECTIONS AND ZERO LOBBYING THAT INCLUDES ANY MATERIAL VALUE.

we have a representative democracy, not a direct democracy, but that is no longer even functioning, due to the grotesque distortions of the bribes being made. paulson got us here as head of goldman sachs (see NY Times: http://tinyurl.com/4qeb3v ) , made all his guys rich, and is now making the same guys rich again. and again. you think that's an accident? you think it's an accident that dick cheney's company has been cheating us for billions in a fake war we created out of a few obviously forged documents? you think it's an accident that Big Oil keeps setting record profits? PLEASE. it's all quid pro quo and the sooner we defeat the institutionalized bribery, the sooner we will get responsive, responsible government...

what if we all formed our own lobby and refused to vote for someone who did not make stopping the legal and illegal bribes the centerpiece of their election platform? that would solve 90% of the other problems we are seeing...

[Heavhauler]

I think it was Jefferson who said
" A good democracy needs a revolution about every 20 years "
I think we are over our time limit.

[MagisterLudi]

Sounds like a good idea. Aye but the rub is who will lead it and on what basis? Otherwise you'd get a temporary mob rule followed by either a Restoration or a Cromwell/Stalin/Hussein clone.
People like Washington, who voluntarily gave up power are very, very rare.

[AdamMarx]

When is democratic decision-making optimal and when is auto-cratic or oligarchic decision-making optimal? Do we want the Federal Reserve choices or Supreme Court decisions to be democratic in large sense?

The financial crisis emerged, in part, from information asymmetries. Corrupt rating of securties did prevented an accurate assessment of risk or mortgage backed securities. Incentives for purveying the ARMs and the lack of caveat emptor drove lending to parties unable to support the mortgages.

The better the information, the better the market works. The freeze in the credit marke is due to banks not knowing what other banks have in their portfolios----toxic asset? Banks can't "know" and so are unwilling to take the risk.

All that said: if the information is there, the allocation market mechanism might be just fine (assuming everyone has similar cognitive capabilities for processing the information---big assumption). Government can help by improving information. However, market advantage often emerges from information asymmetries. Inevitably players game the system to find undisclosed information or hide information to create an advantage.

Such innovations will be found and exploited. Can they be limited? Perhaps--but it may often happen "after the fact." Unfortunately, every few cycles a toxic innovation emerges. The signs of this meltdown were there 2 years ago or more. But the congress and senate did not act on those signs. Nor did millions of investors. So what does that say about democracy or even the masters of the universe?

[MagisterLudi]

Excellent post. To add to this: it is difficult for politicians who still think in terms of industrial age technologies for comprehend postmodern economy. Thus the liberals and right wingers cling to predictable and hopelessly outdated concepts and narratives. Maybe the next generation of more info- sophisticated politicians will get a better handle on things. Right now the world capital manipulators are running rings around politicians. May be a series of basic information theory seminars for the Congress?

[Tom95134]

We live in a democracy only to the extent that the people on Wall Street allow us to live in a democracy. The name of the game is "corporatism". It's similar to fascism but with a bit thicker veneer of democratic institutions. Everybody in Congress knows that they owe their continued positions of power to the money changers on Wall Street.

[Choicelady]

Indeed - and it was part of the 1975 blueprint for globalization that warned us this would happen. The book, "Crisis of Democracy" which is still being used in colleges, lays out the necessary steps for developing a corporatist world of global riches. One of the main ingredients is harnessing the 'democratic distemper' and assuring that elites have all the room they need to rule. Then read David Cay Johnston's "The Great Risk Shift" to see what they've done to us - and continue to do unless we stop it.

I do believe the outpouring of energy around this election for a man perceived - and Lord I hope it's true - to believe people matter and that democracy is important says how hungry people are for a return to a REAL democratic society. We've yielded too long. Even those who have perceived how shallow most of our elected officials really are have failed to challenge the parties, have opted out or thought themselves 'too good' to participate. There's no time for that self indulgent luxury. We either take back our democracy and create standards of economic justice through that process, or we're doomed.

[Rule Of Law]

Bless you, Choice Lady. The Crisis Of Democracy is the Trilateral Commission's (Rockefeller, Kissinger, Zebrenski, and other One World Elites) blueprint for the destruction of Democracy, not its protection. It is how to make the US easier to dominate through destruction of education, unions, wages, voting rights, home ownership--all of which have come to pass in the last 8 years. This is not tin foil conspiracy stuff--

http://www.trilateral.org/projwork/tfrsums/tfr08.htm

but the real program for our enslavement by the wealthy of the world. Having it all is not enough for them; they want the rest of us to have nothing.

[Doofus]

Go watch 'The Bank Run' scene in 'It's a Wonderful Life' & then take a breath.

What's happening is that a lot of (rich) nervous people are getting out of the
market for now, presumably.

Okay, so the US is not a democracy. It has always been a republic, and was
established by an elite. Let's try to remember Lincoln's words about not letting
'government of the People, by the People, for the People perish from the earth.'

[Doofus]

By the way, the entire movie could easily be re-shot with Barack
& Michelle Obama in the Jimmy Stewart & Donna Reed roles,
and OBVIOUSLY John McCain as Mr Potter. I am so looking
forward to a happy ending, one that Frank Capra would be
proud of.

[biwee]

The real question that neither will answer:
WHO let this very small group of prople earn hundreds of millions of dollars each year and be taxed at the 15% rate for federal income taxes???? WHO are these people.......Rubin could tell you.

[Choicelady]

WE let them do this! We steadfastly refuse to elect real reformers. We are content with the known and then the most disillusioned tend toward candidates who are either off the wall or just OK. We don't understand our system, and we're afraid of change. No one is deluded that Obama is a radical, but he has the moral fiber to do the unusual, the risky, the necessary I think. I hope! That's what has galvanized so much energy and support for him. He needs to listen to people such as Kucinich who understands fundamental issues of national economic self sufficiency. He also needs to listen to ordinary voters. And it will be hard and dangerous to challenge corporatism - they are huge and powerful and ruthless - but now is the time. They are weakend by their own greed and corruption. We can make change if only we will. Business as usual is a recipe for diaster.

[Rule Of Law]

Does your state have electronic voting? If so, start there.

[joebaggadonuts]

There are some very thoughtful posts responsive to you here Sanjiv. Your last question asks what are we if they are our masters. The obvious answer remains unstated, but it should not be. WE ARE THEIR SLAVES.

No this is no longer a democracy. As several have pointed out it has ceased to be one for a long time now. We do need a period or renewal or revolution if we are to come to believe in democracy again. It is fitting if a half-black man is the one who is elected to make the transition as our leader. Our nation was born with slavery as an integral part of its economic life. It is fitting to realize that we have all become slaves now.

In the failure of the financial institutions and the destruction of the house of cards that the masters have built for themselves to keep all power from us, let us be smart about the world we create from this. Let us do it together, in a spirit of liberty for all, fraternity among all, and equal rights for all.

http://en.wikipedia.org/wiki/Libert%C3%A9,_%C3%89galit%C3%A9,_Fraternit%C3%A9 Liberté, égalité, fraternité

[fussygorilla]

But we never were intended to be a democracy by the Founding Fathers. They feared the masses(us) and believed in the rule by a few rich elites. I can quote Madison, Jefferson, Adams, and others. Masses were believed to be ignorant, who should be kept under control by those who rule. All of these men were rich, slave holders, and only pretended to believe in a true democracy.
So, if we want change in our political system, we must go to the root and change that. Government by the people, is a myth and it has never been true.

[arvay]

I think this is an exaggeration. It's correct that the founders thought that "democracy" and anarchy are equivalent. That's why they specified indirect rather than direct elections, and a republic rather than a direct rule by vote. They were horrified by the mobs of the French Revolution, although I don't think they mourned the monarchy.

And only some of them were slave owners -- you're forgetting the New England colonies.

But they did expect a democratic government and in fact crafted a constitution that has people decide who their rulers will be and sets limits on what the government can do (Bill of Rights, in particular). And the resulting system has been evolving to include more democracy rather than less. At least until the right-wing administration of Bush.

I don't think many people believe in a "true" democracy, which would subject every law and regulation to a vote. Impractical.

But we are significantly less in charge of our society than we were even as recently as the Eisenhower administration. Since then, the corporate and military/industrial cabal has successfully undermined our government, and rules by subterfuge, hidden deals and, increasingly, via direct control.

That's what needs to be extracted and replaced by a new democratic order.

[arvay]

For some years now, the right has successfully sold the notion that democracy and market forces inhabit separate parts of the universe, and that the effects of the market, whatever they are on freedom, are overwhelmingly benign.

In fact, we are actually living in a "directed" republic with decisive power in the hands of a semi-visible elite. The economic collapse has stripped away that illusion, as our corporate government wields its dictatorial powers before our eyes. And it's acquiring the same kinds of powers it envies in nations like China, i.e. the power to tap our phones and computers, to arrest on suspicion of "terrorism" and to torture.

The idea that the economic power of our business "leaders" somehow doesn't negate the power of the people is as naive as the idea that declaring something "off budget" will keep it from affecting our national economy -- and our lives.

This election is our best chance in living memory to take the power away from our true rulers, the semi-visible ones on K Street and in the corporate boards of America, in a peaceful change. Capitalism must become a part of our economic engine, closely supervised by the people's government.

The alternate route is clearly visible. We imposed such conditions on Latin America for decades. And the result will be the same kind of revolt here. Think of how much more vulnerable the intricate infrastructure is here. Think of Americans with their 200 million firearms.

[MagisterLudi]

"This election is our best chance in living memory to take the power away from our true rulers, the semi-visible ones on K Street and in the corporate boards of America, in a peaceful change."
This election, despite the noise from the Faithful will not change anything. Obama is a conservative Christo-fundie. Despite the pretty salad dressing talk.Granted he's better than Bush. But almost anyone is. Hopefully, Democratic Congress will restrain him somewhat.
Both Obama and McCain are firmly entrenched corporate stooges who strongly support and are supported by Corporate America. Both have almost identical economic polices. Both voted for the bailout. BOTH voted to approve Bush tort reform; supported Bushes bankruptcy reform; voted YES on massive tax cuts to oil companies; supported Rice for Sec. of State. Wake up and smell the sell out.

[mamacat]

"Just how catastrophic is the ongoing economic crisis?"

Should we trust the people who have been using the system to make themselves ridiculously rich at everyone else's expense to tell us what is wrong and how to fix it?
Is there an independent body that we can trust to give us explanations and advice?

It does seem, at the moment, that the very people who got us into this mess are the ones we are listening to for advice on how to get out of it. Since they have been working for years to effectively steal as much money as they could, while allowing the entire system to disintegrate, how do we know that they have suddenly become trustworthy?

Maybe if this administration hadn't pulled the wool over our eyes so many times before it would be easier to trust them this time. As it is, I have to wonder if we aren't being made fools of one more time before the clock finally runs out on Dubya and his cronies.

[DragonMama]

"Should we trust the people who have been using the system to make themselves ridiculously rich at everyone else's expense to tell us what is wrong and how to fix it?"

You're wrong. They're not ridiculously rich. They're OBSCENELY rich. It's like we're asking Larry Flint and Hugh Hefner to help regulate the porn industry.

[GrainOSand]

Thank you Mr. Gupta, I have heard many say this is not about Obama, this is about us. I say it every chance I get. I realize the question at hand right now is, "Who are we?" as a people claiming to be a collective identifying always with movement towards a more perfect union? What good is talk of liberty when freedom is lost to the struggle to survive? Many are tethered to the grind while others make huge sums off that fact and find leisure time and trust fund solutions for life for their offspring. I am not critical of any person of great wealth who is not ruled by their wealth and can still relate to the common person, rule number one is -- "Don"t be a hata!" I do have harsh words for the haughtily rich, the ones as Prince said, "That do not know how to give." I am not talking about money either. I am talking about of heart, because they truly do care about country. It is not profit first.

We know it is profit first and that is what drives our democracy. We need a revolution of heart and mind that spurs a review of whom we are and whom we want to be. A sincere approach will result in a society transformed. The courage to do this probably only comes around at a mass level every thousand or so years. I will leave that analysis up to the historians.

[Yermammy]

Wisely put. per usual.

[swamp-yankee]

Yes. Just so.

[Yermammy]

Greed drives the lizard brain. Survival instinct in overdrive. It's time to stop this madness of obscene inequality. There are no guarantees in life, yet some are born to it. Reach your own logical conclusion.

[ChaosTChoir]

Douglas Adams wrote a story about where Lizards run a country. Lizards hate peope and people hate the Lizards. But is a democracy he wrote. So why do people vote? They vote so the wrong Lizard does not get in.

Somehow we need to get people to vote for people not Lizards.

Our founding fathers did suggest something about We the people, I don't think they suggested we the Lizards as the foundation theory.

[noesis]

First step: Get back on the gold standard and cut out the Federal Reserve swindlers.

[Rule Of Law]

Agreed!

[R.W. Sanders - Huffpost Blogger]

no matter what name a government goes by, democracy, republic, etc., the fact remains there is an aristocracy that through accumulated wealth controls markets and therefore our lives. This has been true throughout history. There have been brief times when this pattern has been disrupted, but given time the status quo returns. the fact is that the entire world is a capitalist system. the purchasers and sellers may be governments, corporations, or any other entity, but the basic system remains those that have and those that don't. cynical but true. i would say the distinction between governments should be measured by their facilitation of class mobility and the way they treat their disadvantaged. by that measure, the u.s. does pretty well.

[WorkingClass]

The U.S. did pretty well under the new deal. Not any more. Unless you mean its better than Mexico or Uganda. I agree that capitalism itself is not negotiable. It is the natural order and will always assert itself. But it can be controlled by government to the end that the workers receive the full value of their labor from the system. Its called a mixed economy. The new deal was a mixed economy. It created the most affluent working class in history.

[Choicelady]

Capitalism is quite new, not at all the only way to go. Prior to Revolution in 1776, the entire economy boomed under strict regulation over profits, rights to produce and sell, and standards all set by the towns. See Morton Horwitz, Transformation of American Law. Even doctor's fees were regulated! The fundamental assumption of the economy was that families and thus communities should be self sufficient. The point of the economy was the welfare of the greatest numbers of people not the accumulation of riches. Of course there were inequalities, but they were much more narrow, and the rich did NOT govern. Had some of that persisted after the Revolution, factories and other economic enterprises would likely have occurred - there was no end to innovation and novelty, but it was controlled to be in the best interests of the communities in which it occurred as the first, not sole but first, priority. Today some of that sense can be restored via revisions in the massive tax laws favoring coporate FAILURES or by encouraging those who work in an enterprise to own and manage it. The latter form of ownership, neither capitalist nor socialist, has proven the most profitable and stable in America. To wit - Southwest Airlines. Remembering that people matter at all levels and working to restore that concern is not a pipe dream and may be essential to our national survival.

[carriellbee]

It is only non-negotiable to those who do not know the truth.

http://video.google.com/videoplay?docid=7065205277695921912

This video will explain how we are enslaved by this system.

[Rule Of Law]

Sure, mobility. But what about the subtle differences, like the Magna Carta, or our Constitution? What about rule of law, not rule of man? Without these, we are nothing more than aphids being milked by the Master ants. And under Bush/Cheney we have seen "laws," though they cannot really be laws if they void the Constitution, passed that move all power to his unitary presidency, and remove all accountability and transparency from our system. Aphids.

[Yermammy]

Good to see you back in the mix :) (and GrainOSand too). It's nice to have a little truth sprinkled on top of the horseapple sandwich we're told to eat. If you are not leaders in people (which I'm sure you have the potential), you are certainly leaders in your mindset. To question authority is not only patriotic, it is a duty. Thank you.

Barack Obama (unless you're married to a banker)

[Yermammy]

You weren't at the St. Regis by any chance. I accept nothing. This crap of born nobility has been practiced for centuries and it's getting old- fast. Unless you're going to take media completely away from people, there's no way to avoid the inevitable civil unrest. Standing Army or no standing army. The internet and television instantly gives the poor and disadvantaged, a smack in the face on the inequalities, and it is not just here, in the U.S. Like Madeline Albright stated, "it's world wide". "Let them eat cake" didn't work in France, and it's not going to work here, anymore. Real easy to pontificate, when you can do it from the luxury of your own home. Keep that in mind.

[Buddy McCue]

Economic mobility is actually lower in the United States than it is in more-regulated European economies. Here's the data.

http://www.epi.org/content.cfm/webfeatures_snapshots_archive_07192000

[Choicelady]

It is not essential that it works to the detriment of so many. I question how much, compared to Europe, the US does take care of its people. We've had along history of what Palin notes well as "exceptionalism" that makes us embrace ridiculous ideology such as everything being a matter of 'personal responsibility'. We believe, thanks to John Wayne and Hollywood, that people conquered the West (and indeed conquer is the operative term - ask any Native American) with rugged individualism rather than the cooperative and collective mutual support that really occurred. We have taken individualism to ridiculous levels and thus justify in every issue from health care to bank malfeasance that if you have a problem, it is entirely YOUR fault. There is no longer any sense of the Common Good or even the general welfare. We created this dog-eat-dog, zero-sum society through step by step legal changes. We can undo it. The fact that there is not perfect equality if not an issue; the fact that the inequality is monumental and obscene most certainly is. When first the private sector abandons whole populations then the government does the same, and when that utter contempt for human beings spreads as it now has, you will have a crisis of legitimacy in the government itself. And that way lies revolution.

[msjimmied]

And the band plays on...tune into CNBC and you will have every broker extol the wisdom of buying when the market is down. Yo! Look at the charts, they for all intents and purposes haven't gone anywhere in the last 10 YEARS!! I remember the day the Dow hit 10,000. It seems almost another life time ago, and yet here we are.

If you study the charts closely, you will realize you don't have a chance in this market. Look at the volume of shares traded just before the Dow drops. The last thing that goes is the Dow, cos most people watch the Dow numbers. The market is decimated before you even get a heads up if that's your barometer.

This one is going to be BIG, because it's been allowed to go on for far far too long. Hey McCain, just like the crap Keating pulled huh? Just way bigger.

[Rule Of Law]

ms, as your little league coach told you, "Practice makes perfect!"

[msjimmied]

All the stars are lined up and we haven't reached capitulation yet. The Dow is just an indicator of a much broader market. The last to go is the blue chips.

[msjimmied]

Methinks i was misunderstood. Read it again...Look at today's market action. and yesterday, and the day before. What was I not clear about? You do not believe that this is as it should be? you reap what you sow. And the fat cats under the republican's mantle has raped our economy under the guise of "Bankers" or whatever...

We are not at capitulation levels yet. This cancer needs to be surgically removed before anyone will have faith in the stock market again. I am a bleeding heart democrat. But perhaps, since english is not my mother tongue, I did not express myself clearly?

[MagisterLudi]

The market is decimated"
9,447 is "decimated market?!!! Yes, economy is in trouble but 10,000 is NOT decimated market, for the people who can reason, at least. Ever heard of the business cycle, msjimmied?

[AmandaBC]

"Ever heard of the business cycle, msjimmied?"

Pfffffft!! Please show us the last time the US government spent $700 billion to bail out Wall Street. Even your hero McSame finally recognizes that what he said about the "fundamentals" being strong was WRONG. This is NOT just part of a business cycle, the US economy hasn't been in such trouble since 1929.