07/27/2009 05:12 am ET Updated May 25, 2011

Does the Chamber of Commerce Think We're Stupid?

The U.S. Chamber of Commerce is unleashing a $100 million campaign "to defend and advance America's free enterprise values in the face of rapid government growth and attacks by anti-business activists." (That would be people like me)

Although the Chamber is virulently anti-union, it is not led by economic Neanderthals. They supported TARP, the stimulus bill, and the bailout of GM and Chrysler because the group understood that our entire economic system was in collapse and their members ("96% ... are small businesses with 100 employees or fewer") were about to be crushed. But now that trillions of dollars have been pumped into Wall Street and into the economy, they're worried that Congress is going to over-regulate free enterprise and kill the very essence of our system. As Thomas Donahue, the Chamber's CEO, said on Fox TV, he wants Americans to understand how important it is to be able "to fail or succeed beyond your wildest dreams."

I'd like to understand that myself. Donahue will have to explain how Wall Street's wildest dreams turned into our economic nightmare. But the Chamber of Commerce can't explain it because it's in denial.

Here's the biggest fact the Chamber can't accept: Free enterprise on Wall Street failed miserably. It wasn't poor people getting risky mortgages or government interference in markets, or even greedy mortgage brokers that did us it. It was our financial free-markets run wild. (For the full lowdown, see The Looting of America.) Free enterprise in the real economy of goods and services didn't fail. That economy was pushed over the cliff by a freeze up in the financial sector, which was the inevitable result of an orgy of laissez-faire deregulation.

Our government, from the 1980s on, dismantled New Deal financial regulations and encouraged the accumulation of wealth by a tiny handful of Americans. (Today the top 1/10 of one percent of taxpayers take in nearly as much income as the bottom 50 percent.) Under both Clinton and Bush, our government refused to regulate new-fangled derivatives, which mushroomed into the most profitable casino in the history of Wall Street. Instead of dispersing risk as advertised, these derivatives created enormous systemic risk that finally crashed the system - splat, right before our very eyes. Plain and simple, the 30 year experiment in deregulation and trickle-down economics failed.

When Donahue educates us on the great innovations brought forward by modern free enterprise he better not be talking about the havoc created by "innovative" financial engineering. Our children and their children will be paying for the damage caused by synthetic CDOs, CDO squareds, and their many, many cousins.

I wonder if he's going to educate us about how the financial sector used fantasy finance to gobble up one quarter of the GDP. And I hope he'll tell us what to do about institutions that are "too big to fail". His free market ideology is a bit fuzzy on that: Letting them fail crashes the economy he's pledged to protect, and not letting them fail means we have to use trillions of taxpayer dollars to bail them out -- as Donahue supported with TARP and related programs.

But most importantly we all need instruction on how to save our vibrant free-enterprise economy from the ravages of Wall Street. Free-enterprise in the banking sector is not like free-enterprise in the rest of the economy. As John Maynard Keynes warned us seventy years ago, left to its own devices, financial markets are inherently unstable and can quickly turn into vast speculative and dangerous casinos.

Which brings up a sticky point: Who is funding the $100 million educational program that in effect will defend Wall Street's right to crash the economy again? Will it come from all those small businesses that have been suffering precisely because the financial sector crashed, cut their credit lines, and unemployed their customers? Or will most of the funding come Wall Street tycoons and large financial institutions that we rescued from destruction with our tax dollars? Maybe the Chamber will open their books so we can properly acknowledge those who are sending us to school.

Because this broad ideological campaign fails to distinguish finance from the real economy, Donahue is about to blow $100 million to exonerate Wall Street. Furthermore, he's going to lobby hard to free giant financial firms from regulations that would protect and stregthen the small businesses that the Chamber supposedly represents.

In the end, I don't think Americans will buy it. They know the financial sector is not made up of a bunch of mom and pop stores. And all of us are tired of paying for Wall Street's right to "fail beyond your wildest dreams."

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.