One Market Under God

Perhaps you remember the economic crisis of 2008? The near-vapourization of all that electronic stuff we call "money" was narrowly averted one Sunday afternoon in New York when Hank Paulson bullied the major U.S. banks into a semi-nationalisation. Those tumultuous weeks in the fall of 2008 completely discredited the notion that the free market could regulate itself. France's president Nicolas Sarkozy famously said in a speech that Anglo-American economic leadership was dead. There is no "free hand" of the market. This was a golden opportunity for a reinvigourated Left to take the lead in shaping a more fair, stable economic system. But having themselves embraced free-market ideology over the past 20 years, (neo-)liberals have nothing to bring to the table. Indeed, the silence from the Left has been deafening.

So we are in a bizarre situation: a Left-leaning U.S. President hires neo-conservatives right off of Wall Street to fix the economic crisis. These former bankers and stockbrokers launch a massive Keynesian spending program (the most Lefty sort of Big-Gubmint socio-economic manipulation) to keep the economy ticking. Yet there has been no fundamental re-think of how this all works. Regulation of the financial markets has not been strengthened. The recent article in Rolling Stone asks rightly "Why Isn't Wall Street in Jail?". Yes, an example was made of the most outlandish Ponzi-schemer who has been locked up for 150 years*. But the rest of the Albanian-inspired** banking system remains unchanged.

The solution to the crisis in the financial sector is very confusing: Moneybags McScrooge doling out zillions of dollars (borrowed from the Chinese, BTW) so that Joe Six-Pack will keep buying stuff? Castro himself couldn't make this up. But if you look closely you will see that the money was borrowed against Joe Six-Pack's future earnings.

This all reminds me of a very insightful book I read over a decade ago. Thomas Frank's "One Market Under God" exposed the Faustian bargain of the investment-oriented economic system and drew parallels between Silicon Valley and the 19th-century coal and rail robber barons. He mocked those of us who were only too happy to give up (for some stock options in some dot-com) the social benefits that our grandparents, marching in the streets, had gained in the first decades of the 20th century.

The quiet dismantling of financial regulations has led to some of the most expensive financial debacles, starting with the Savings & Loan crisis of the late 80's. But this was all settled years ago. Those who forget history are doomed to repeat it, I guess.

* = for 10 points, can you name him? Last name begins with "M".

** =  In the mid 1990s, Albanian society was caught up in a Ponzi frenzy the likes of which have not been seen since the Great Tulip Craze of 1637. One cannot blame the Albanian people, as decades of communist rule had left them innocent as to how money is made honestly. The entire society was almost fully invested in one pyramid racket or another: Generals, secretaries, and secretary-generals put all their savings in these 'sure-fire' paper companies. When the house of cards fell the country descended into chaos. The army deserted, the armories were looted and a nation of suddenly very poor people began shooting at stuff. It was in the news.