This morning's op-ed in the New York Times by Goldman Sachs exec (or should I say, ex-Goldman exec) Greg Smith is turning heads and has the financial world abuzz. The truth-telling about a change in culture within the investment bank away from one that is client-centered towards one that is money-centered appears directly aimed at the vampire squid's soul, if it has one left.
There are easy comparisons to make between Smith's piece about the internal culture at Goldman and our money-drenched political system. Smith recounted colleagues describing clients as "muppets" as they sold them products they didn't need. Lobbyist Jack Abramoff called his Indian tribes "monkeys" and "troglodytes." One secret to get ahead at Goldman? Trade any "opaque product with a three-letter acronym." In Washington, super PACs, c4s and 527s are the modern tools of the trade for politicians and operatives alike.
More than anything else, Smith's unflinching take-down of the unethical turn at Goldman to serve themselves rather than their clients was what struck me.
Our political system functions in exactly the same way. In fact, Goldman execs and its PAC have donated nearly $5.8 million to federal candidates and committees in the last two election cycles and has spent close to $9 million on lobbying in the last two years. That should come as no surprise given the nexus between Wall Street and Washington has been well-documented. Below are just a small number of examples from the last few days.
- Yesterday, National Journal reported that Senate Minority Leader Mitch McConnell (R-Ky.) was spending hours each night on the phone calling big money donors to prepare for his re-election -- which is three years away. McConnell, who self-identifies as the Darth Vader of campaign finance reform, already has amassed a war chest bursting at6 million.
- Recent reporting by Politico showed that some retiring lawmakers are openly talking with lobbying firms before they even leave office. They'll cash in on expertise and relationships with their colleagues still serving in office.
- One major backer of Mitt Romney, hedge fund CEO Ken Griffin, literally claimed that the wealthy have "insufficient influence" over today's politics.
- The GOP presidential nomination fight is, in effect, a three-way battle between the super PACs of the leading contenders. The question from Tuesday's primaries in Mississippi and Alabama on most political insiders' minds was whether Sheldon Adelson would continue to float Newt Gingrich's campaign. The lesson for 2016 contenders, on both sides of the aisle, is clear: find a billionaire friend, or two.
- After being rejected by voters in the South yesterday, Mitt Romney is raising $2 million in New York City today and tomorrow. The only greater chasm than that which exists between Romney and the conservative base of the Republican Party is the one between Wall Street donors and the rest of America.
So who can blame voters for believing that politics and elections are owned by the moneyed few? With new laws in dozens of states limiting the ability of as many as 5 million Americans to cast ballots coupled with deregulation of the financing of our federal elections all but completed, what's a voter to do?
Perhaps we need more Greg Smith-type truth-telling from those who have lived in the belly of the beast on Wall Street and in Washington. That'd be a good start. But while one person leaving with a kiss-and-tell story salves his or her conscience, it doesn't alter structural imbalances. An op-ed is not a campaign. The truth is, in politics, muckraking out the corruption is only half the story. We need new laws, like the Fair Elections Now Act, that help to lessen the impact of money-in-politics by attacking corruption and by increasing participation.
Goldman won't change its ways because of an op-ed and the political system won't change with one expose. That's in part because we're never going to get all the money out just like we'll never remove greed or profit-seeking from Wall Street. The essential challenge before us is getting everyday Americans invested in our democracy, and making voters and their votes the coin in the realm of American elections, not donors and their dollars.