For years, we’ve lived with this crazy idea put forth by conservatives that “class warfare” is a terrible thing that Democrats often fall back on and it only divides America. In January, 2003, then-President Bush decried critics of his tax cut proposals as agents of “class warfare,” despite the diminutive response the proposals were receiving from the opposition. It was an aggressive, in-your-face statement that set the stage for the bi-elections later that year. What would have been more appropriate would have been for him to be talking into a mirror, for few can now doubt what Bob Borosage of the Campaign for America’s Future has been arguing for years – namely that the signature accomplishment of the Bush years has been to drastically weaken the lot of working Americans. Everything from tax cuts that gave 90% of the benefits to the already wealthy to coddling of Wall Street at every possible opportunity that arose, most notably in the deregulating of the financial markets.
In many ways, we have been at this since “supply-sider” Ronald Reagan assumed the presidency. He quite straightforwardly sought to shrink government while embracing the free market cheerleaders who believe in unfettered markets. Tax cuts became the answer to everything. Reduced federal spending was close behind. Outside of the military, real progress in the evolution of governance in America came to a standstill for the past 28 years. So perhaps it is no great surprise that the barons of Wall Street are having a bit of difficulty adjusting. One loves the story about John Thain, recently dethroned from Merrill Lynch after revelations that he spent $1.2 million of the firms money to “redo” his office about a year ago. While the meltdown hadn’t taken full force then, it was well understood that the financial giant was in trouble and had been losing money for some time. It has, of course, ended up in the dumps, recently purchased for a song by B of A. What I love about the story is the simple idea that he apparently thought the role to model (as all CEO’s realize that role modeling is a core requirement) was that of potentate not worker bee. Having an antique “commode” worth tens of thousands of dollars somehow conveyed a message he cared about.
Thain is hardly alone. It seems as though the titans of industry, whose bonuses long ago departed any connection to the overall financial performance of their companies, view the ascension to pinnacle roles as a license to take all they can get away with. Reading that 2008 Wall Street bonuses amounted to some $18.4 billion in the worst financial period since the Great Depression is simply astonishing. If not illegal, it is certainly the moral equivalent of stealing. So, I say a pox on all their houses. Let’s “claw back” everything we can, but let’s also bring these people back to earth. Maybe establish a legal limit on the ratio of highest paid to lowest paid employees? In my organization that ratio is about 8 to 1. So the non-profit world is a bit different. Let’s set it for 20 to 1 in the for profit world. I bet there would be a lot more well paid folks on the low end of the scale. So, what was wrong with the idea of class warfare?
As we celebrate the dawn of a new day in Washington, change is happening in other places as well. One – Vancouver, BC – elected a new mayor just days after President Obama was elected. I think you will find his Inaugural Address, copied below, deeply inspiring.
Gregor Robertson stepped down two years ago from the Tides Canada Board before running for the Provincial Legislature, prior to the Mayoral race, but he is an honored friend and great supporter. Like Obama, he is a confirmed and deeply committed family man, and he shares an openness to new ideas, many traditions, and fresh approaches. It’s really worth a read….
“Deep Local
Welcome. We’re gathered today in the traditional territory of the Coast Salish people, and I want to begin by thanking them.
As we honour one tradition, we renew another: bringing the inauguration out of City Hall and into the community.
I want to thank the residents of South Vancouver for welcoming us all to the Sunset Community Centre. This is one of my favourite places in the city, beautifully designed by Vancouver architect Bing Thom. His design draws on our farming history, as well as our cultural diversity and the grid of our streets and avenues today. But it’s also open: to the people, to the community, to the future. It’s one of Vancouver’s greenest buildings. I can’t imagine a better place to begin this new chapter in our city’s story. (more…)
There was a most intriguing article in the NY Times Business section last Friday, just below the fold. It recounted the story of what happened in Sweden when they hit a major banking fiasco in the early 90’s. The go-go 1980’s had precipitated the crisis, but their solution – advanced and executed by right of center political leaders – was to nationalize the banks, wiping out the shareholders, and to put the “toxic” assets into what they called the “bad bank” (later named Securum) to hold until economic conditions changed enabling a sale. Portions of this strategy were borrowed from the US when we hit that terrible crisis in the S&L industry in the late 1980’s. Instead of calling it a “bad bank” we called it the RTC (Resolution Trust Corporation). Defunct S&L’s were placed under the control of the RTC, and their assets sold off to bargain-hunters. A very large part of the “bailout” was repaid through these sales. As important, the equity of the risk-taking shareholders of the S&L’s was wiped out.
In the Swedish case, Securum took over nearly $3 bn of assets and ended up repaying the national treasury nearly 60% of what had been invested. Importantly, the creation of the “bad bank” instilled fear among some of the large banks that didn’t want to fall under government control. SEB, one of the larger banks that was controlled by the Wallenberg family, set up their own “bad bank” into which they placed the bad assets, allowing the remaining parts of the bank to recover and thrive. This private bank did the same as the government enterprise and sustained losses, to be sure, but it was done entirely outside of the government’s program.
So far, as Paul Krugman has been arguing, neither the Congress nor the Obama administration has indicated much interest in this alternative, though George Soros and other observers have been increasingly vociferous that this will be a necessary part of a successful intervention. The fear that he and others have is that the more centrist economic appointments (Summers, Geitner, Furman) may not be willing to stare down their friends and colleagues in the financial world and wipe out the shareholders of the likes of Citibank. If they don’t, however, we may end up in the mire for a good deal longer.
Also of interest:
“George Soros on America’s New Engines of Growth” (2:24):
Like vast numbers of Americans, I watched with awe and tears this morning as President Obama was sworn in as the 44th President of the United States. It is a remarkable event I never expected to see in my lifetime. I was an adolescent when the Civil Rights movement came of age. I watched television news of non-violent protesters being attacked with Police dogs and fire hoses. I was horrified when the FBI was sent to Mississippi to find, and then confirm the deaths of, 3 young civil rights workers – none older than my brother who had signed up for a “freedom ride.” And, I watched the triumph of one of the greatest legislators the US presidency has ever known – Lyndon Johnson – in passing the Civil Rights Act and, later, the Voting Rights Act. But I have also watched the grinding poverty of inner city communities and the intentional ignorance that nearly 30 years of conservative rule has fostered, only making things largely worse for young African Americans. Rhetorical flourishes such as “No Child Left Behind” give the lie to the slow, inexorable dismantling of government programs intended to address structural inequities resulting from the centuries of slavery and discrimination that is our history. And yet, here we sit with a new President whose parents literally could not have lived in many states at the time of his birth because of their different races. It is truly amazing. But, as Martin Luther King III said just yesterday, his father’s dream has not now been realized. It is still a dream. But it is a dream that now has legs. It is more than an abstraction to say that opportunity to attain the highest office in the land is a real thing. Barack did achieve it, so others can follow in his example. But the obstacles are still huge and will remain so for the next person to attempt what he has achieved. There is so much more to be done, and I can’t think of anyone who is not inspired to redouble our efforts, recommit to our goals, and rekindle our dreams of a world that we would be proud to call our own – just, righteous, compassionate, and peaceful. It is closer today than it was yesterday, and tomorrow, we need to get back to work to help realize that dream.
Also, of interest:
“In Honor of Madelyn Dunham: To Dream from MLK to Obama Inauguration”:
“Barack Obama on the Inauguration”: