{"id":346354,"date":"2010-02-21T13:30:53","date_gmt":"2010-02-21T18:30:53","guid":{"rendered":"http:\/\/firedoglake.com\/?p=68380"},"modified":"2010-02-21T13:30:53","modified_gmt":"2010-02-21T18:30:53","slug":"financial-myths-what-is-the-progressive-alternative","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/346354","title":{"rendered":"Financial Myths: What Is The Progressive Alternative?"},"content":{"rendered":"

\"StainedThere are many stupid things you have to believe if you want to be taken seriously on financial matters. These myths about economic and financial matters form the playing field for the debate over financial reform. Simon Johnson<\/a> says that these myths are a kind of social capital which finance companies like JPMorgan Chase and Goldman Sachs have accumulated over the years. One channel of this influence is the revolving door, men (they\u2019re always men) moving from the finance companies to government and back, trailing clouds of the perfume of money. Another channel is the unexamined claim of expertise of business people. These channels of influence only work because Congress and the White House uncritically accept these myths.<\/p>\n

Here are five:<\/p>\n

1. Finance companies are geniuses at risk management<\/a>.<\/p>\n

2. Finance companies must be allowed to grow to gargantuan size<\/a> if they are to compete.<\/p>\n

3. Finance companies allocate capital<\/a> to its highest and best use, with the corollary that any government interference<\/a> in finance company business is evil.<\/span><\/p>\n

4. Open borders for trade and capital benefits all Americans. We know it benefits China<\/a>. Benefits for US workers<\/a> aren\u2019t so easy to track down. Most Americans think we need to manufacture things here<\/a>.<\/p>\n

5. The US is the greatest economy<\/a> in the world. Compare Germany\u2019s manufacturing<\/a> sector with ours; it offers high wages and beats the US<\/a> in exports.<\/p>\n

These and other myths are the ground on which all economic battles are fought. If we want to argue for re-imposition of Glass-Steagall, we have to start from miles away, arguing that at least some financial regulation is a good thing. If we want to argue for some kind of industrial policy, we have to overcome the rote objection that government is no good at picking winners, and that we are already the greatest. If we argue that we need to improve our infrastructure, we are told that markets will fix things, and we should privatize the infrastructure.<\/p>\n

The myths are accepted by all of the financial elites. Peter Wallison, an employee of the American Enterprise Institute, asserts that speculation<\/a> is a perfectly good thing, because it provides liquidity. That is such an obvious truth that Wallison doesn\u2019t think people should waste time thinking about it.<\/p>\n

Several months ago, I was on a blogger call with one of the Treasury people who was explaining the Administration\u2019s ideas about regulating swaps. I asked if it wouldn\u2019t be a better idea to discourage speculative activity and encourage productive investments. The official said that it was not really possible to separate the two. It doesn\u2019t matter which party is in power, both agree on these myths.<\/p>\n

This is a serious problem for progressives. We have not created<\/a> an alternative view of capitalism, as have so many other nations. Let\u2019s start by getting away from the myths, and thinking about society as it exists.<\/p>\n

Right now a tiny number of people reap a massive share of the economic benefits of living in our society. IRS data shows that in 2007, the top 400 households earned an average of $345 million each, and paid income taxes at an average rate of 16.6%. Adjusted for inflation, their income increased<\/a> five-fold between 1992 and 2007. Vast amounts of that wealth are going to hedge funds for the purpose of speculating. Little of it is going into productive activity. This happened while 90% of Americans didn\u2019t even keep place with inflation over the past decade, our infrastructure deteriorated, our factories left the country, our national debt increased dramatically, and poisonous politics destroyed the ability of the majority to govern.<\/p>\n

Here\u2019s a first draft of a question: Why should a few people reap such a disproportionate share of the fruits of the labor of all of us? Here’s the catch: you can\u2019t use myths or talking points. It isn\u2019t an answer that \u201cthey earned it, they should keep it\u201d. It isn\u2019t an answer that the Constitution or the Founding Fathers or Adam Smith or Ayn Rand said it was a good idea. Those and other myths are out of bounds. Let\u2019s think about whether the current structure is the best way to organize things. Here’s the rephrased question:<\/p>\n

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Assume that you know what you know today about our society. Assume you are in charge of designing the rules for our society, not knowing where you will wind up in that society. What is your justification for establishing social arrangements with the current distribution of rewards?<\/p>\n<\/div>\n<\/blockquote>\n

image courtesy cobalt123<\/a>
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There are many stupid things you have to believe if you want to be taken seriously on financial matters. These myths about economic and financial matters form the playing field for the debate over financial reform. Simon Johnson says that these myths are a kind of social capital which finance companies like JPMorgan Chase and […]<\/p>\n","protected":false},"author":4416,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-346354","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/346354","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4416"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=346354"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/346354\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=346354"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=346354"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=346354"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}