The global crisis was not born directly out of the US economy; the global financial crisis was born out of America’s pro-business political establishment, which perpetuates the system’s endemic failures.
Presently, much of the world is comfortable with the idea that the ongoing economic tailspin is the handiwork of a few misguided American CEOs who got a little too fat and greedy trying to hunt down the elusive American Dream.
And how could we forget those sensational stories about middle-aged executives throwing million-dollar pool parties, adorning their Jacuzzis with gold fixtures and jumping ship with the booty as the company sinks to the murky depths? With these fantastic stories of self-indulgence being played up in the media, it was hard to believe that the crash was not due to a handful of reckless CEOs who really should have known better.
And then the public got the supreme satisfaction – dare I say pleasure – of watching as the masters of the financial universe got knocked down to earth with the rest of us overspent mortals. Many CEOs were even sent away to some posh detention center for white-collar crooks. Yes, the lush lawns of these prison facilities may be meticulous, with cells larger than your average middle-class home, but it was still fun to watch anyways. Perhaps only European football or the 24-hour porn channel attracts a bigger audience these days.
Unfortunately, however, it was not just a few token corporate heads that rolled in the wake of the Big One; the contagion quickly spread around the globe like swindler’s flu, gnawing away at the support beams holding up weak and strong economies alike.
Suddenly, miraculously, Barack Obama appeared in Washington like Moses on the mount to find his people engaged in an orgy of crude behavior. The arrogant corporate chieftains, who imitated veritable governments by stealing from the poor and giving to the rich, felt the fury and wrath of the Oval Office like never before. Obama even attacked executive bonuses that were being cashed at the same time the government was bailing out their wheezing companies.
All things considered, it was a dazzling performance by a refreshingly articulate young leader. But unfortunately, the tricks of syntax notwithstanding, Obama’s performance was akin to the court jester amusing the king with a juggling routine on a listless Sunday afternoon. Why? Because it exonerated the true culprit of the heist of the century: America’s insanely pro-business political system.
In US taxpayers we trust
In reality, it was not the Evil Bankers and Corrupt CEOs who got America and the global village stuck in its worse economic slump since the Great Depression. Although the reptilian bottom feeders of the corporate world, transformed by the media into strangely likeable comic book villains, played a large role in creating this economic tragic-comedy of epic proportions, their overall contribution was rather slim.
Architectural preservationists love to chastise their government leaders whenever a historic building is demolished in order to pave the way for something ‘new and improved.’ So where was the public outcry when the architecture behind the economy was equally reduced to ruins in the name of progress?
The true culprits behind the Global Crash of 2008 are an assortment of US political legislation that gave Corporate America the green light to pursue their own infinitely narrow vision of the American Dream. In other words, the government repeal of social and labor legislation is what really brought down the flimsily US-built house of credit cards. The business executives just took the rap for the crime, not to mention a 3-trillion dollar bailout to keep their mouths shut.
Since the creation of the Bretton Woods economic system [In July 1944, 730 delegates from 44 nations assembled at the Mount Washington Hotel, Bretton Woods, New Hampshire, USA, where a new system of rules and organizations, like the World Bank and the International Monetary Fund, were institutionalized], the United States has been pursuing a global economy that is free of all regulation, void of democratic oversight and beneficial only to the corporate world. In other words, a laissez-faire economy that defends the interests of the large corporations to the detriment of the individual.
But things were starting to coalesce in favor of Monsters, Inc. look before World War II. Even before the Civil War, corporate power was entrenching itself deep into the fabric of American life. Here are just three of the hundreds acts of government legislation that have pushed the agenda of big business, while severely disenfranchising the majority.
Dartmouth College Case (1819)
This particular court case was for the world of business what the Communist Manifesto was for the Communist Party. In an effort to keep Dartmouth College a private institution as opposed to public, the lawyer Daniel Webster argued on behalf of individuals to uphold private property without interference from the state. So far so good, right? But what transpired is that corporations began to argue the case on behalf of themselves as well, thus handing over to these monolithic organizations all of the powers that were intended for the (human) individual.
Consider the following definition that Chief Justice Marshall bestowed upon the corporation during this court case: “A corporation is an artificial being, invisible, intangible and existing only in contemplation of the law. Being the mere creature of law, it possesses only those properties which the charter of its creation confers upon it… Among the most important are immortality, and, if the expression may be allowed, individuality; properties by which a perpetual succession of many persons are considered as the same, and may act as a single individual…”
If reading that paragraph does not cause you to tumble out of your chair, I suggest you read it again. “Invisible, intangible, immortal and individual” – isn’t that asking a little too much? Not even the heavenly ordained kings of the past were granted so much outrageous powers.
As Niral T. Shah wrote in the Dartmouth Free Press, “These decisions allowed the corporation to explode into the dominant institution of American society, affecting every imaginable facet of our lives.” Indeed, although there are some major differences between the Democratic and Republican parties, the one thing that makes them inseparable and even united is their inalienable belief in the present economic system that demands that the corporation reign supreme above all else.
As Noam Chomsky told Spiegel magazine with his usual candor, “Nobody should have any illusions. The United States has essentially a one-party system and the ruling party is the business party.” If such a definition of the US political system were proven to be accurate, it would be very difficult not to say that the legendary land of Lincoln has all but transformed into a de facto fascist state with corporations and politicians lying together in the same stinky bed.
Glass-Steagall Act
This regulatory legislation was put into force following the Crash of 1929 with the goal of limiting the ability of commercial banks from engaging in reckless speculation. This was accomplished by essentially separating the banking sector from the investment sector. And it was none other than the co-chairman of John McCain’s presidential campaign, former Sen. Phil Gramm (R-Texas), who successfully spearheaded in 1999 the attack against Glass-Steagall.
One year after Glass-Steagall was relegated to the history books, Swiss bank UBS devoured brokerage house Paine Weber (the repeal of Glass Steagall also led to a merger in 1998 between banking giant Citicorp and financial conglomerate Travelers Group to form Citigroup Inc, which I sone of the world’s biggest financial services; On Nov. 24, 2008, the US announced a $50 billion bailout of this company). More interestingly, two years later, Gramm was chosen to be vice chairman of UBS’s new investment arm.
Later, Gramm lobbied hard in behalf of UBS in the US Congress to loosen rules that held in check predatory tactics used by lenders and brokers to get homeowners trapped in exorbitant mortgages. In other words, the exact practices that brought the US financial system to its knees last year. For his efforts, “Gramm and two other lobbyists collected $750,000 in fees from UBS’s American subsidiary,” Politico reported. “In the past year, UBS has written down more than $18 billion in exposure to subprime loans and other risky securities and is considering cutting 8,000 jobs,” the political website added.
How was UBS punished for its reckless behind-the-scenes shenanigans? Well, certainly not like it committed any major offense. According to a report by the BBC, “UBS is raising 6 bn Swiss francs ($5.3 billion) from the government… It will also be able to transfer up to $60 bn of distressed assets to a fund supported by the Swiss central bank.” The report concluded that “UBS has been one of the heaviest losers from the subprime crisis.”
If only losing was so painful for everybody! This only proves the maxim that describes the present economic system as “socialism for the rich and capitalism for the poor.”
PATCO
On August 3, 1981, the Professional Air Traffic Controllers Organization (PATCO) declared a strike in order to receive better pay, working conditions and a shortened workweek. Then US President Ronald Reagan accused them, as government employees, of breaking the law that forbids them to leave their posts. Two days after PATCO workers went on strike, Reagan held true to his word and fired 11,345 striking air traffic controllers. Two months later, the union lost its certification.
In 2003, then Chairman of the Federal Reserve, Alan Greenspan, summed up the consequences of Reagan’s unprecedented action: “Perhaps the most important, and then highly controversial, domestic initiative was the firing of the air traffic controllers in August 1981… President Reagan prevailed, as you know, but far more importantly his action gave weight to the legal right of private employers, previously not fully exercised, to use their own discretion to hire and discharge workers.”
Reagan’s decision gave big business the green light on many other projects as well, including setting up shop on foreign soil at the expense of the domestic workforce to maximize profits. Today, US union membership remains at its lowest level in history.
In conclusion, the greedy and gluttonous behavior of the bankers and businessmen should have come as no surprise. Indeed, it is their ‘natural’ acquisitiveness, internal jealousies and enormous egos that keep the big wheels of the global economy churning forward. However, what is surprising is that our political leaders continue to underestimate these febrile passions and at the earliest opportunity destroy any legislation that protects the people from the rapacity of the corporation.
Clearly, the lessons of the Great Depression have been forgotten, or our business leaders feel that they understand the internal dynamics of the business cycles too well for such a collapse to occur again. As a result, our government leaders, under pressure from the corporate lobbyists (who have become a permanent feature of the American political system), disassembled years of crucial legislation that was enacted after the Great Depression to safeguard from another economic debacle.
Unless America brings to power a totally new political party that refuses to remain subservient to the demands of big business, it will only be a matter of time before the US taxpayers are paying for yet more corporate arrogance.
Robert Bridge