It is a strange thing to hear a Republican candidate attribute problems in our economic system to “greed, excess and corruption.” But I suppose we should get used to strange things between now and November.
The problem with John McCain’s new feisty populist talking point is that it’s aimed entirely in the wrong direction. It suggests that Wall Street’s implosion is the result of some moral fault in the individuals who run our financial institutions. They are, doubtless, no angels; but what we’re watching this week is the result of a systemic failure — a failure of government, and not just individuals.
The thing is, the financial marketplace that is at the heart of this week’s meltdown runs on greed. Greed is the whole point. It’s supposed to be that way: you got money, you seek a higher return on investment. Isn’t that, like, capitalism? Take the greed out of Wall Street and what do you have left?
As for corruption: Were there bribes on Wall Street? If so, let’s put somebody in jail. But McCain’s charge is the first suggestion I’m aware of that the collapse of so many financial institutions is the result of outright wrongdoing rather than incompetence and colossally imprudent risktaking.
I’m a liberal Democrat; I know from complaints about corporate greed. But really, McCain’s charges are head-scratchers. Because most of us expect Wall Street bankers to be greedy. Comes with the territory. And when we put money in one of their investment accounts, we usually expect them to get us the best return, too.
The problem is, we expect that investment to take place in an environment where there’s a reasonable guarantee of good information and fair dealing. We expect the brokers and bankers to have a good grasp on the nature of their financial instruments, and to give us good advice on the risks we’re taking when we choose one over the other. What’s evident in the collapse of Lehman Brothers and the other continuing shockwaves from the subprime mortgage mess is that, for a long time, the system suffered from a shortage of information and transparency and an excess of risky, blind betting.
We had a decade-long experiment in putting our economy’s assets largely in the hands of entirely unregulated institutions and managers. (Phil Gramm, who was one of McCain’s chief financial advisers until his impolitic comments about our “nation of whiners,” was one of the people who shot the starter pistol for this decade of excess when he served as chairman of the Senate Banking committee.) Now the experiment has proven a disastrous, costly failure. There’s no doubt that we will return to a more cautious, fairer, better-regulated system; we have no choice in that. The only real choice we have is who to trust to execute that re-regulation.
One party has always stood for kicking away safeguards and regulations in the name of the free market driven by — what? — oh, right, greed. The other has a long tradition of believing that responsible government oversight can keep markets fair and open. McCain and his party have a long record of opposition to the very sort of regulation that might have helped avoid, or minimize, the collapse of our financial institutions. The candidate’s eleventh-hour spasm of “eat the rich” rhetoric — however entertaining, in its topsy-turvy-world way — is far too insincere to occlude that record.
- December 12, 2008 @ 10:43:11 [Current Revision] by Scott Rosenberg
- September 16, 2008 @ 16:14:20 by Scott Rosenberg