One of the most consistent and loudest and falsest “criticisms from the left” of the Obama Administration has been that it failed to properly punish and re-regulate the financial sector. The criticism is usually heavily made up in populist cosmetics: Main Street versus Wall Street, the 99% versus the 1%, oligarchs versus the people - that kind of stuff. The substance of the critique, however, is conservative and elitist and it confirms an insight of a pair of German sociologists from the 1800s about how ideas become entrenched in our consciousness. They wrote:
The ideas of the ruling class are in every epoch the ruling ideas, i.e. the class which is the ruling material force of society, is at the same time its ruling intellectual force
Our society is ruled by financiers and our ideas are suffused with financial concepts, values, and slogans. We inhabit a mental world in which “shareholder value”, “business model”, “market value”, “liquidity” , and other terms of the art are ubiquitous even when we don’t really understand what they are supposed to mean. And in this shared world view, finance is the center of the universe. Our two Victorian age critics went on to say:
The class which has the means of material production at its disposal, has control at the same time over the means of mental production, so that thereby, generally speaking, the ideas of those who lack the means of mental production are subject to it.
We are not just automatons but it is damn hard to think outside the box. This was true for the authors I am quoting far more than they realized, and it is still true even if you are a really smart professor at Brooklyn College or Harvard or write for The Nation or Harpers and you have books by Zizek on your very own bookshelf and immediately recognized the much cited but rarely understood quote I’m basing this article on. Even if you don’t watch cable TV and have a vest and charming goatee you are, like us miserable peasants, subject to the ideas of the dominant class. The logic of finance and the stories of finance are all around us, we grow up in this environment and it affects and limits how we think. That’s why the “left” critics of the Obama administration, generally not the sharpest knives in the drawer, agreed with their right wing counterparts that finance, specifically banking, is what matters. They look up and see that the right and the (boo, hiss) neoliberals advocated deregulating finance and they then conclude that re-regulating finance is the correct party line.
Just for a moment, let’s think about “re-regulating banking” as a program for left-wing reform. What a piss poor, timid and pitiful effort. We’ve had years and years now of the whole left-liberal spectrum attempting to rally the masses to proposals like “re-institute Glass-Steagall” or “prosecute bankers”. How embarrassing. We end up with a bizarre situation where the aim of strident left-wing rhetoric is to extoll the economic and social system of the USA in the good old days before the neoliberals dismantled New Deal banking regulation. You know, the 1950s, when things were great for regular people - apparently this means first world white men (Whoops! Could it be that the racist and sexist ideas of the dominant class also influence our super enlightened political commissar class? Perish the thought).
Maybe we could be really adventurous and think about perhaps alternatives to the system where private banking, regulated or not, controls investment. In that case, we might pay more attention to effects of the stimulus bill (which funded, among other things, an electric car industry), the reorganization of the auto industry, the health care reform, and other Obama administration efforts which might, if we are lucky, serve to lessen the control finance exerts on society. Or not. We could just stick to our cardboard cutout model of the world and write indignant screeds to Salon about how the Obama Administration was disappointing us.
Here’s the rest of the paragraph from Karl Marx and Fred Engels, who were smart people, tragically limited by the Victorian Age in which they lived. But this was a good insight.
The individuals composing the ruling class possess among other things consciousness, and therefore think. Insofar, therefore, as they rule as a class and determine the extent and compass of an epoch, it is self-evident that they do this in its whole range, hence among other things rule also as thinkers, as producers of ideas, and regulate the production and distribution of the ideas of their age: thus their ideas are the ruling ideas of the epoch. For instance, in an age and in a country where royal power, aristocracy, and bourgeoisie are contending for mastery and where, therefore, mastery is shared, the doctrine of the separation of powers proves to be the dominant idea and is expressed as an “eternal law.”
Nice work boys, too bad your political ideas were junk and your economics was imperialist.
Thomas Frank’s interview with Elizabeth Warren includes Warren attempting to balance praise for the President with a completely false critique that is a staple of the Professional Disappointed Left.
[Warren] When I think about the president, for me, it’s about both halves. If Barack Obama had not been president of the United States we would not have a Consumer Financial Protection Bureau. Period. […] At the same time, he picked his economic team and when the going got tough, his economic team picked Wall Street.
You might say, “always.” Just about every time they had to compromise, they compromised in the direction of Wall Street.
That’s right. They protected Wall Street. Not families who were losing their homes. Not people who lost their jobs. Not young people who were struggling to get an education. And it happened over and over and over. So I see both of those things and they both matter.
When the Obama administration rescued the auto industry and the UAW, Wall Street absolutely insisted that bondholders who had irresponsibly financed the worthless managements of both GM and Chrysler must get 100% back. That did not happen. The shareholders were wiped out. The bondholders suffered, as they should have, massive losses. The Obama Administration used the savings to wipe out the debts of GM and Chrysler and to save the UAW pension/health fund. None of this is secret and the right wing has bitched about it non-stop since the moment it happened. The “left”, however, doesn’t give a damn about a million jobs, the security of GM and Chrysler retirees and the unions. This example is not the only one of Obama’s economic team battling on behalf of working people, but it is the most revealing - about the Progressives and “the left” and what they think is important. The “left” in the United States is a creepy group of narcissists who think everything is about them, their pet issues, and their feelings. Elizabeth Warren lost a lot of credibility in my eyes, when she bought into their story.
I am not arguing that A.I.G. was an innocent in the economic debacle of 2008. But unlike its trading partners, it neither created garbage mortgage securities nor peddled them to unsuspecting investors. Its error — a whopper for sure — was not recognizing that it was the patsy at the poker table when it insured those troubled securities. [ Gretchen Morgenson, NYT]
Oh my! All AIG did was reap ENORMOUS profits writing unregulated insurance policies (in the form of derivatives) which it did not have reserves to pay, on financial assets it did not research, irresponsibly and probably illegally implicitly using the credit value of its regulated insurance business as backup, in order to facilitate bank evasion of regulatory requirements. And after booking immense profits and paying out obscene bonuses to the management who sold these policies the company collapsed when it turned out that the banks were not paying AIG insurance fees just to be nice but to cover an actual risk that AIG didn’t fucking bother to evaluate because it was too happy with the money. And then when AIG could not pay, its imminent bankruptcy threatened to pour tanker loads of gasoline on the burning finance industry in 2008, so the US Government had to step in and save the company. AIG default on those derivatives would have probably caused major European banks to collapse and also triggered mandatory panic sales of assets by insurance companies and pension funds that were only permitted to own AAA rated assets. Fortunately the Government offered AIG assistance at punitive rates and secured, in the end, a strong profit for taxpayers as the price of this rescue. And now the entitled shareholders are back at the trough, demanding $40billion more for their inept, careless, and probably criminal supervision of AIG and the New York Times Gretchen Morgenson, wants us to feel that AIG didn’t do anything wrong when the big bad gummint made them suffer some consequences.
Oh. Well. Let’s all scream about Geithner again.