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How to Bust the Bankers’ Club
C. J. Polychroniou speaks with progressive economist Gerald Epstein about why alternative banking is possible and urgently needed.
Feb 29, 2024
It’s been almost a year since the banking crisis kicked off last March. On Friday, March 10, 2023, Silicon Valley Bank, or SVB, a state-chartered commercial bank based in Santa Clara, California, collapsed after facing a sudden bank run and capital crisis. SVB’s collapse was the second largest bank failure in U.S. history since Washington Mutual in 2008. Two days later, New York-based Signature Bank also collapsed due to yet another bank run. But that was not the end of bank failures in 2023. On May 1, the San Francisco-based First Republic Bank, plagued by many of the same problems as those that doomed SVB and Signature Bank, also went under and was seized in turn by regulators who promptly sold all of its deposits and most assets to JP Morgan Chase. Two more banks would go on to declare insolvency later in the year, bringing the number of failed banks to a total of five.
Indeed, 2023 was the worst year for U.S. banks since 2008. But why do U.S. banks continue to fail after the reforms that were implemented in the aftermath of the 2008 global financial crisis? Why does the business model of commercial banks remain so fragile? World renowned progressive economist Gerald Epstein, author of the recently published book
Busting the Bankers’ Club: Finance for the Rest of Us, tackles these questions in the interview that follows. Epstein is professor of economics and co-director of the Political Economy Research Institute (PERI) at the University of Massachusetts Amherst.
C. J. Polychroniou: Jerry, in your new book Busting the Bankers’ Club, you describe the business model of commercial banks in the age of neoliberalism as “roaring banking” and you juxtapose it with that of “boring banking,” which prevailed from the New Deal era right through the Reagan era. Under “boring banking,” banks were prohibited from many of today’s financial engineering practices and financial shenanigans. The result was relative financial stability and economic growth. Obviously, bankers hated this business model, but what factors made possible the transition from “boring banking” to “roaring banking?” Was it simply because of the “logic” of the free-enterprise system at work, or did it happen because of actual intervention in the realm of policymaking?
Gerald Epstein: Like much historical change, the evolution from “boring banking” to “roaring banking” was the outcome of the underlying dynamics and pressures of the economic system and specific historical conjunctures, all with plenty of involvement of actual human beings and classes.
The major Wall Street bankers were never happy with the New Deal financial regulatory rules that made it harder for them to charge excessively high interest rates, make highly leveraged bets, or engineer fraudulent Ponzi or “pump and dump” frauds against customers. The numbers on Wall Street bankers’ incomes show why. As The Bankers’ Club reports, prior to 1929, bankers scarfed down incomes almost twice as high as the average wage in the economy; but after the Depression and up until the late 1970s, their incomes were about average for the whole economy. As my colleague James Crotty put it, these bankers wanted to break out of their New Deal cages to restore their superior incomes and power.
So, starting in the 1960s the major Wall Street banks organized “the Bankers’ Club,” an army of politicians, lawyers, economists, regulators, and fellow business associates to incrementally poke holes, then ditches and finally massive canals through the wall of New Deal financial regulations. According to Robert Weissman, now president of Public Citizen, these financial firms spent over $5 billion, just counting from the early 80s, on the club and its activities. This effort led, most famously, to the repeal of the Glass-Steagall Act in 1999 under the Clinton administration, which then officially ended the separation of commercial from investment banking.
The Bankers’ Club had a different idea: Tear down the New Deal model and usher in a new era in banking, the “roaring banking” system of mega financial institutions and high-risk banking strategies.
These efforts, carried out by real (mostly) men, were aided by underlying dynamic changes in the U.S. and world economies. The U.S. experienced phenomenal economic growth in the aftermath of World War II, and the world also witnessed the resurrection of the European and Asian economies. In due time, competition facing the U.S. in trade and finance intensified, leading to the demise of the Bretton Woods system of fixed exchange rates and relatively stable interest rates. Massive military spending by the U.S. government on the war in Vietnam from 1964 to 1973 combined with the effects of the geopolitics of energy driven by the formation of OPEC led in the 1970s to large increases in commodity prices and inflation, again putting upward pressure on interest rates to keep up with inflation. Then-Fed Chair Paul Volcker jacked up interest rates in an attempt to break the inflationary pressure, once again destabilizing the interest rate structure in banking. All of these forces put enormous pressure on the New Deal framework, partly because the system depended on relatively stable interest rates. The New Deal model chose to stabilize interest rates in order to try to stabilize bank profits and promote borrowing and investment in non-speculative activities.
Thus, something had to give. In principle, the government could have reformed the system. But the Bankers’ Club had a different idea: Tear down the New Deal model and usher in a new era in banking, the “roaring banking” system of mega financial institutions and high-risk banking strategies.
CJP: The neoliberal era is replete with financial crises and bank failures. In 2008, the world experienced the worst economic disaster since the Great Depression because of a financial crisis that originated in the U.S. There was a sharp decline in economic activity which led to a loss of more than $2 trillion from the global economy while millions of people lost their homes and unemployment skyrocketed. Yet, the regulations that followed in the aftermath of the 2008 global financial crisis were essentially cosmetic, as evidenced by the collapse of five major banks in 2023. What were the reasons that SVB, Signature Bank, and First Republic Bank failed, especially since the Board of Governors of the Federal Reserve System insisted at the time that the banking system was “sound and resilient”?
GE: It is good that you bring up the collapse of SVB and the failures of Signature Bank and First Republic, since we are about to reach the one-year anniversary of these important events which occurred in early March 2023.
The Dodd-Frank Act, signed into law by then-President Barack Obama in 2010, was supposed to bring about the end of the “too-big-to-fail” (TBTF) banks and government bailouts. But a year ago when these banks got into trouble, the turmoil threatened to spread panic into the broader U.S. financial markets, signaling a possible series of bank runs in It’s a Wonderful Life style throughout the system. The Dodd-Frank Act had tried to forestall these types of events by making larger banks (those with assets of at least $50 billion) be subject to more careful monitoring by the Federal Reserve, requiring them to hold more capital of their own so that they could withstand larger shocks, and have greater liquidity (cash or cash-like assets) in order to help forestall bank runs. But during the Trump administration, these “medium-sized banks” lobbied to be exempt from the tougher rules. A major player in the fight was Silicon Valley Bank.
The Fed was still acting as chairman of the Bankers’ Club rather than steward of the public interest.
But on March 10, 2023, after a major bank run hit Silicon Valley Bank, it was forced to close. The Fed did not bail out the bank’s executives, but guaranteed the deposits of its remaining depositors even when these were far above the $250,000 amount covered by Federal Deposit Insurance Corporation insurance. When contagion spread to other banks in the U.S., the Fed guaranteed all deposits, no matter how big.
In April, the Federal Reserve published a major exercise of “self-crit” in its handling of SVB, prior to and after the crisis. It’s pretty accurate assessment included the following four problems:
- SVB’s board of directors and management failed to manage their risks.
- Federal Reserve supervisors did not understand SVB’s vulnerabilities.
- When the Fed supervisors did understand risks, they did not take sufficient steps to prevent a crisis.
- The Fed should not have allowed SVB to fly under the radar even though Congress had raised the threshold bank size in order to strictly monitor and regulate banks.
Though accurate as far as they go, these criticisms miss a crucial point: These are essentially the same problems that allowed bigger banks to instigate the Great Financial Crisis in 2008-2009. The Fed itself had done much to block more fundamental reforms during the Dodd-Frank negotiations and afterward as the rules were finalized. And the Fed under Jerome Powell supported the weakening of rules for the medium-sized banks.
In other words, the Fed was still acting as chairman of the Bankers’ Club rather than steward of the public interest. This, the Fed’s post-mortem would not admit.
CJP: Speaking of the Federal Reserve, in your book you do label it as the “chairman” of the Bankers’ Club. Briefly explain what you mean by that, and does the Fed actually have any input in regulatory reforms proposed by lawmakers?
GE: The Federal Reserve, the central bank of the United States, has two main functions. It is in charge of U.S. monetary policy, which includes trying to manage short-term interest rates and the overall supply of money and credit in the economy. And it also has a major role to play in regulating and supervising banks, including the mega banks or what I call the “roaring banks.” The Federal Reserve has been delegated these powers by the U.S. Congress, which, along with the president, establishes the mandates, or major goals, which the Federal Reserve is supposed to try to achieve. The question of the Fed’s mandates or goals has been a subject of long-term political fights in the United States, which explains why the Federal Reserve is a “contested terrain.” I say that the Fed is the “chairman” of the Bankers’ Club because history shows that, for most of the time, the big banks and the capitalist class at large win the contest for dominance of the Fed, both with respect to its monetary policy and regulatory policy. For example, after a long political battle, the Federal Reserve was given by Congress a dual mandate: to achieve high employment and stable prices (steady and low inflation). In addition, more recently, the Federal Reserve was given a mandate to maintain financial stability. But if one studies the Fed’s record, we find that when there is a conflict between keeping inflation very low (which finance normally prefers) and achieving full employment (which workers tend to prefer) the Fed almost always chooses low inflation. And when it comes to regulating banks tightly in order to maintain financial stability, or bailing them out after they get into trouble, the Fed has preferred to simply bail them out. More generally, the Fed offers significant favors to the banks, and in return expects the banks to protect its operations from the intrusive hands of Congress and the president.
To answer your question more directly, the Fed has a big influence on the regulations that Congress eventually passes, as one can see from the inordinate influence that Alan Greenspan had in the legislation to gut Glass-Steagall, and the inordinate role that Ben Bernanke and the Fed had in ensuring that Dodd-Frank regulations were riddled with loopholes.
CJP: The Dodd-Frank Wall Street Reform and Consumer Protection Act has been treated as one of the most significant U.S. regulatory reforms since the Great Depression. But it does remain a highly flawed regulatory framework, and even plugging all the holes in it won’t do the job, you argue in your book. What are the strategic shortcomings of the Dodd-Frank approach to financial regulation?
GE: To identify the flaws in Dodd-Frank, one can start by identifying the causes of the major financial crises we have experienced as well as the rocks and hard places the regulators found themselves between in responding to these crises. These causes are:
- Financial institutions that were allowed to become too big to fail, to manage, to regulate, and to jail.
- Lack of accountability for bad actors who took on excessive risk, even engaged in fraudulent activities, and were left free after the crash to take the money and run and hit the restart button on their next gig.
- Insufficient limits on the debt that these financial institutions could take on and the interconnectedness they could create between themselves and other financial institutions so that when one financial institution got into trouble it could threaten to bring down others like a house of cards.
- Insufficient controls on the short-term financing of long-term or excessively risky financial investments.
- Leaving dark holes in the financial system, that is, institutions and markets that are subject to little or no monitoring, much less regulation. These include hedge funds, private equity firms, and others. Post-crisis problems often emerged from these dark corners of the financial markets.
- Lack of precaution in the implementation of new financial products, so that dangerous products could infect the financial system before sufficient controls could be fashioned.
- No quid pro quos for government support: for example, bailouts with no strings attached.
Dodd-Frank did not really address these problems, and the Trump administration weakened the Dodd-Frank rules even further. As such, these problems are still very much with us.
CJP: What measures do you propose for improving financial regulation, so we won’t have bank failures and severe recessions triggered by financial crises?
GE: At a minimum, we must address these “causes” of the problems that I identified above:
- Cut down the size of the mega banks. For example, implement a modern Glass-Steagall Act that would reduce the maximum size of these banks and separate core banking functions from riskier, more speculative ones.
- Make traders and CEOs responsible for the steps and missteps they take. For example, implement “clawbacks” so that the incomes they are promised to receive from trades or decisions are held in escrow and only paid out when the investment pays off, without the need for government support. These bankers also need stricter legal consequences for breaking the law, including jail time for egregious offenses.
- Strict capital, leverage, and liquidity requirements for all banks that have significance for the overall economy, including “medium-sized banks” on the order of Silicon Valley Bank.
- Comprehensive monitoring and regulation of all financial institutions, markets, and products; no dark holes in the financial system.
- A precautionary principle for new financial innovations, such as Artificial Intelligence (AI) cryptocurrencies. Rules should ensure that these are safe and effective before they are allowed to be introduced into the core financial system. If anything, they should first be tested on the fringes where they cannot do significant harm.
- Support from the Federal Reserve or the U.S. Department of the Treasury in the case of a crisis should only be forthcoming as a last resort and should only come with strict strings (and quid pro quos) attached: Those responsible should be held accountable; the bank should have to change its business model to a safer form; the bank should engage in social services for the community, much like an individual legal offender, at least until it has paid back its bailout funds in full. A more reasonable quid pro quo is that the bank should always have to engage in more socially responsible behaviors simply by virtue of benefiting from this implicit insurance policy from the Federal Reserve or the U.S. government.
This last point touches on an important and more general issue. Financial regulation, at least since the New Deal, has been a negative screen: a list of things banks should NOT do. However, we have many crucial societal problems that the financial system should be taking a more proactive role to help solve. These include, for example, helping to build a green energy economy and ending our reliance on fossil fuels. Also, and this is equally important, contributing to the economic development of marginalized communities. Financial institutions that get government support—and that means ALL of them—should not only avoid crashing our economy but also contribute to our society’s important needs.
CJP: In Busting the Bankers’ Club, you advocate the establishment of banks without bankers because financial regulation alone will not be sufficient to address the plethora of problems (poverty, inequality, discrimination, climate change) facing the contemporary United States. How far can public banking go in addressing these problems, and how do we overcome the resistance of the political system to radical proposals that aim toward the making of a democratic economy?
GE: Yes. Private banks, no matter how regulated, or how incentivized to do socially useful activities, will not be sufficiently motivated to provide many of the key long-term social goods that we need: green energy, healthy communities for all, sufficient financial resources for the development of our rural areas. The reason is that these banks focus on maximizing profits in the short to medium term. Many of these other activities are socially profitable but might not be sufficiently privately profitable, at least in the short to medium term. As a result, we need more publicly oriented financial institutions, such as public banks that are dedicated to broader social goals.
There are activist groups in more than 20 states across the U.S. who are pushing for public banks of various kinds. The most successful ones so far are located in California, but New Jersey is also moving closer to establishing a public bank and there is a strong public bank campaign underway in Massachusetts.
The Federal Reserve should give the same level of support to public banking organizations as it has to private banks.
Still, there are several general obstacles to implementing an ecosystem of public banks adequate to face the problems we have. One is the intense opposition of the Bankers’ Club even though most of these public bank initiatives are structured to minimize competition with the private banks. For example, they do not take deposits; they do not lend directly to customers but rather to other banks who then lend to final customers, etc. Apparently, the Bankers’ Club simply does not want to legitimize any competitive sources of finance that could undercut their power.
Moreover, even if you add up all the public banking initiatives, they would still not be large enough or widespread enough to make a huge dent in the problems we are facing. What we need are national public banking institutions. For example, the Inflation Reduction Act (IRA) created a small Green Development Bank that, with support, could grow and thrive. A more activist and socially oriented Federal Reserve could play an important role here. The Federal Reserve should give the same level of support to public banking organizations as it has to private banks. And it should broaden its tools to promote key social goals: For example, the Fed could buy Green Bonds. It has already bought asset backed securities to bailout the banks.
How do we overcome resistance from the Bankers’ Club and right-wingers to these kinds of reforms? Two things: Join the Club Busters, those activists who are trying to block the Bankers’ Club and promote more socially useful institutions; and protect democracy by helping to get money out of the financial system (eg. repeal
Citizen’s United), expand voting rights, and fight against fascism.
In the last chapter of my book, I suggest that we all bite off what we can chew. Look around and join others who are fighting one of more of these battles. Join them and pitch in. As our forces gather, we will have impacts that build on each other. If some of our initiatives get blocked, other initiatives will move forward.
There are many Club Busters around the country, and indeed the world. In the U.S. we have public banking organizations,
Americans for Financial Reform, Better Markets, Rainforest Action Network, and many others. Support politicians who fight for these issues, including Elizabeth Warren, Sherrod Brown, Jeff Merkley, and Alexandria Ocasio-Cortez.
There are plenty of places to join others and take a stand. That’s how we fight the Bankers’ Club.
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Regulate Their Greed or Pay the Price
As philosophers from Socrates to Jesus to Adam Smith have told us over and over: unregulated greed always ends up enriching the few while devastating the rest of society.
Mar 13, 2023
The failure of the Silicon Valley Bank (SVB) shows us, once again, that unrestrained greed isn’t good. For even modest greed to have a positive effect in society, it must be regulated.
The CEO of SVB didn’t like the regulations imposed after the 2008 financial meltdown by Congress’ Dodd-Frank legislation, and spent over a half-million dollars bribing…er, influencing…legislators (legalized by 5 Republicans on the Supreme Court) to change the law and exempt his and other smaller, regional banks from what he argued was the heavy hand of government.
While SVB and other smaller banks were generally prosperous and profitable, many wanted to escape from the regulations Congress imposed to protect both depositors and the economy, so they spread some money around Washington DC. Donald Trump then enthusiastically signed the deregulation of smaller banks like SVB into law in 2018.
As Senator Bernie Sanders noted this weekend:
“Let's be clear. The failure of Silicon Valley Bank is a direct result of an absurd 2018 bank deregulation bill signed by Donald Trump that I strongly opposed. Five years ago, the Republican Director of the Congressional Budget Office released a report finding that this legislation would increase the likelihood that a large financial firm with assets of between $100 billion and $250 billion would fail.”
Five years later — predictably — the bank went into receivership and people who’d put their money in its trust were looking at substantial losses while, once again, confidence in the entire system is shaken.
At New York’s First Republic Bank, people were standing in line as the weekend began, suggesting there may be a full-blown run on that bank today. And New York’s Signature Bank was just closed by banking regulators.
The CEO of SVB had pulled millions out just two weeks before, money that Congressman Ro Khanna says should be clawed back and used to make depositors whole:
“There should be a clawback of any of that money,” Khanna told The Washington Post. “It should be going to the depositors.”
Politicians and op-ed writers tight with banksters spent the weekend, of course, demanding government action and bailouts, like in 1987 and 2008. And this morning, President Biden announced he’s going to do it by bending the rules at FDIC. Frankly, he had little choice.
The CEO’s greed didn’t work out well for average taxpayers — who ultimately must backstop the FDIC if this spreads — and bank customers.
These same banksters are the first types of people to tell student loan borrowers that if they can’t repay their debts they need “discipline,” to suck it up, reduce their standard of living, and to “learn the lesson of responsibility.”
But when their own stupid decisions — in this case, investing in largely illiquid long-term bonds — come back to haunt them, they stand before Congress with their hands out.
The era from the 1850s through the 1920s was punctuated by periodic greed-driven bank failures and a lack of federal response to them. One of the biggest of those crashes presaged — some scholars argue, triggered — the Civil War.
Before running for public office Abraham Lincoln was a lawyer in private practice working for the railroads. On August 12, 1857, he was paid $4800 in a check, which he deposited and then converted to cash on August 31. That was fortunate for Lincoln, because just over a month later, in the Great Panic of October 1857, both the bank and the railroad were “forced to suspend payment.”
Of the 66 banks in Illinois, The Central Illinois Gazette (Champagne) reported that by the following April, 27 of them had gone into liquidation. It was a depression so vast that the Chicago Democratic Press declared at its start, the week of Sept. 30, 1857, “The financial pressure now prevailing in the country has no parallel in our business history.”
Unregulated greed wasn’t good back then, either: over 600,000 people died in the Civil War that bank crash contributed to.
Fast forward sixty years.
During the 1920s, according to the Federal Deposit Insurance Corporation (FDIC), “On average, more than 600 banks failed each year between 1921 and 1929.” In the process, billions of dollars were lost to depositors, mostly farmers, working people, and small businesses who’d been locked out of the big banks and didn’t have the resources to lobby Congress.
To make matters worse, because the Republican administrations of Harding, Coolidge, and Hoover all believed bank regulation was a bad thing that interfered with the greed-driven “invisible hand of the marketplace,” each allowed the trend to continue until the entire system collapsed in the 1929-1933 era.
That was another era, almost 100 years before ours, that proved how unregulated greed could damage our nation and create widespread misery (except among the greedy).
In January and February of 1932, respectively, Congress created the Reconstruction Finance Corporation (RFC) and the Glass-Steagall Act, regulating banks to prevent their rich owners from continuing to steal depositors’ cash and then walk away from the banks they’d plundered.
President Franklin Roosevelt, who took office in March of 1933, imposed further stiff regulations on banks and Wall Street, creating the Securities and Exchange Commission (SEC) and putting Joe Kennedy in charge of it.
The late Gloria Swanson, who knew Kennedy well and intensely disliked him (he’d robbed and exploited her), told me over one of our many dinners in her New York apartment back in the 1980s that FDR told her he’d appointed Kennedy because, “It takes a crook to catch a crook.”
And FDR was going after the greedy crooks in a big way.
Between Glass-Steagal and the SEC, banking became a boring if reliably profitable business from the 1930s to the 1980s.
The nation prospered. The middle class grew. The banksters’ greed was hemmed in by FDR’s regulations, then kept there through the administrations of Truman, Eisenhower, Kennedy, Johnson, Ford, and Carter. Bank directors and executives did well, but few were buying their own private jets.
Then, President Reagan, as part of his neoliberal “greed is good” agenda, experimented with bank deregulation by lifting many rules governing the operation of Savings and Loan institutions.
They’d been created in 1932 with the Federal Home Loan Act, which heavily regulated the industry and made it functionally subordinate to commercial banks.
But in 1982, Reagan pushed through the Garn-St. Germain Depository Institutions Act, eliminating previous S&L loan-to-value ratios and interest rate caps while killing their main oversight, Regulation Q.
Soon S&Ls were gambling with junk bonds and risky commercial real estate, leading over 1000 of them (almost a third of all S&Ls in the nation) to crash and burn.
Their greedy CEOs and senior executives made off with billions, leaving depositors in the lurch and the Federal government to clean up the mess. Once again, deregulating greed ended up costing the nation hundreds of billions while making a small group of S&L hustlers richer than the pharaohs.
In 1999, Republicans and a few neoliberal Democrats took another run at deregulating banks themselves, spurred into action by a pile of campaign cash made legal by Republicans on the Supreme Court when Lewis Powell wrote the 1978 opinion in First National Bank v Bellotti, writing explicitly that corporations were “persons” entitled to use their “First Amendment-protected free speech” (money) to influence politicians.
Deregulation would both increase bank profits while keeping the banking sector safe, we were told that year, because no banker or stockbroker in his right mind would risk being “embarrassed” by taking such big chances that a misstep could wipe out large sectors of the nation’s economy.
Greed, they told us, was self-regulating. Predictably, it didn’t quite work out that way.
Republican Senator Phil Gramm made that “self-regulating” point on the floor of the Senate in 1999 when selling the end of the 1933 Glass-Steagall law that prevented checkbook banks from using their depositors’ money to gamble in the stock, bond, and real estate markets.
Bought-off legislators fattened their campaign coffers while banksters started gambling and became billionaires. And, of course, it led us straight to the Bush Crash of 2008 when the entire system seized up and you and I bailed out Wall Street with trillions of dollars, hundreds of billions of which the banksters simply pocketed for themselves and their big business buddies as loans and massive bonuses.
Greed paid off for them, although you and I are still paying for it with our taxes via the national debt.
As with so many things, a kernel of truth — in this case about greed and self-interest — has been twisted into a gamed and rigged system by the morbidly rich. They’re quick to quote from the first chapter of Adam Smith’s 1776 classic The Wealth of Nations:
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity, but to their self-love, and never talk to them of our own necessities, but of their advantages. Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellow-citizens.”
While true, advocates of deregulation completely ignore its corollary, expressed in the second chapter of Smith’s Theory of Moral Sentiments, in which he argues:
“Man is considered as moral because he is regarded as an accountable being. But an accountable being, as the word expresses, is a being that must give an account of its actions to some other, and that consequently must regulate them according to the good liking of this other.”
When Senators Mike Crapo (R-Idaho) and Joe Manchin (D-WV) pushed their 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act, dubbed by Elizabeth Warren and others as the Bank Lobbyist Act, many argued it would lead to more bank consolidations (it did) and let smaller banks like SVB take risks that could endanger depositors (they did).
Senator Warren noted on Twitter at the time:
“The #BankLobbyistAct takes 25 of the 40 biggest banks in the country off the watch list for more federal oversight. It weakens consumer protections on mortgages — and makes it harder to fight racial discrimination in housing,” adding that the legislation would “be paving the way for the next big crash.”
Unregulated greed, she predicted, would lead to disastrous outcomes.
And here we are. Whether the failure of the Silicon Valley Bank (SVB) will spark a wider contagion or just be a two-week story illustrating the stupidity of deregulating and trusting billionaire banksters to do the right thing is, as yet, unknown.
But the principle is known. When money, power, or political advantage are at stake, a small number of unscrupulous (sometimes called “sociopathic”) individuals will say or do any and everything they can to game the system for themselves to keep everybody else out.
It may be selling opioids that kill hundreds of thousands of Americans; or poisoning children’s metabolisms with processed, plastic-packaged, forever-chemical-laced “food” that leads to cancer, obesity, and diabetes; or pushing cigarettes or opposing wind and solar farms. There’s always somebody willing to sell their soul for the right price, and somebody else who can afford to pay that price.
We’ve all seen greed working in real time. My father was killed — knowingly — by the asbestos industry and my brother was killed with full knowledge and intention by the tobacco industry. If there’s not such a similar story in your life, you’re an outlier.
And what we all experience on a personal level is amplified a million times when a single greedy person seizes the power to help or destroy millions of lives, like the CEO of a giant employer that is fighting unionization, safety, or environmental regulation.
Often, these are the most high-functioning and well-educated/well-connected sociopaths among us…and the good ones (as in those “good” enough to make billions but only pay 3% income tax) are particularly successful at selling their own personalities: this is the compounding overlay of narcissism.
Donald Trump is its poster child.
Can we stop the sociopaths, the greed-heads, from continuing their destruction of our food supply, our housing stock, and our environment/climate?
It’s a fight, but the greed side literally can mobilize trillions, if necessary. Still, the human and intrinsic love of democracy and fairness mean the outcome is, at this moment, up in the air.
What we do know, however — as philosophers from Socrates to Jesus to Adam Smith have told us over and over — is that unregulated greed always ends up enriching the few while devastating the rest of society.
And, as we learned from the Iroquois and I write about in my next book, The Hidden History of American Democracy, working on behalf of and protecting society from greedy predators should be the first job of every government.
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"Civility" Should Not Be a Priority for a Democracy Under Threat
Biden is simply hiding behind "civility" to conceal the fact that, all too often, he shared portions of the same anti-democratic agendas embraced by vile segregationists, by his "Republican friends," and by his Wall Street donors
Jul 07, 2019
As an abstract principle, civil discourse is regarded as a virtue. However, one should neither mistake a facade of respectability for civility nor be prepared to sacrifice core democratic principles to achieve civility.
It is extremely dangerous, either in the name of "civility" or "bipartisanship," to yield to those who seek nothing less than the destruction of democracy.
That point was driven home by Richard Evans in The Coming of the Third Reich when he explained how the Nazi Party, which lost the 1932 election, was able to seize and consolidate unchallenged power in 1933.
"It is in the nature of democratic institutions," Evans noted, "that they presuppose at least a minimal willingness to abide by the rules of democratic principles." But it is extremely dangerous, either in the name of "civility" or "bipartisanship," to yield to those who seek nothing less than the destruction of democracy--a point Evans drove home by quoting Nazi Propaganda Minister Joseph Goebbels's harsh reference to the "stupidity" of democracy. Goebbels proclaimed: "It will always remain one of democracy's best jokes that it provided its mortal enemies with the means by which it was destroyed."
Even when offered by a renowned historian, like Christopher R. Browning, a UNC professor emeritus, there is a reflexive tendency to immediately dismiss academic comparisons between the 1932 Nazi threat to the survival of Germany's Weimar Republic and the threat Donald J. Trump and his congressional Republican enablers currently pose to democratic governance, checks and balances, and to survival the rule of law in these United States.
The error in that dismissal lies in an exclusive focus on the end-product of Nazi rule, the Holocaust. Hence, the indignant, yet erroneous criticism of Rep. Alexandria Ocasio-Cortez (D-N.Y.) for her accurate description of recently erected immigrant detention facilities as "concentration camps." People lose sight of the fact that the Nazi concentration camps, which were initially erected in 1933 to house "enemies of the state," did not become "death camps" until after the 1939 outbreak of the Second World War.
The case could be made that the "grotesque and dehumanizing" conditions inside U.S. border detention facilities--not to mention the callous and cruel decision to rip children away from their parents' arms--are as abhorrent as the concentration camp conditions that existed during the first six years of Nazi rule. But the dire warnings provided by historians, like Evans and Browning, were not directed at concentration camp conditions. Instead, Browning, who described Mitch McConnell as a "gravedigger of democracy," laid out the reasons why the disciples of extreme wealth and political inequality--Donald Trump, 21st century Republicans and what Law professor Cass Sunstein referred to as the Supreme Court's "Radicals in Robes," are, in the words of the infamous Joseph Goebbels, "mortal enemies" of democracy.
At what may be our democracy's darkest hour, it is, thus, deeply disconcerting to be confronted with Joe Biden's assertion that if he replaced Trump, democracy's "mortal enemies" would experience an "epiphany" because his "Republican friends" realize that their enabling of executive lawlessness and corruption "isn't what they're supposed to be doing."
Biden's "Republican friends," who Rep. Justin Amash (R-Mich.) recently described as "an existential threat to American principles and institutions," have worked tirelessly over the past several decades to resurrect the same system of Jim Crow at the polls that vile racist segregationists, like Sens. James O. Eastland (D-Miss.) and Herman Talmadge (D-Ga.), sought to preserve when they opposed the Civil and Voting Rights Acts in the 1960s.
Although conceding that Talmadge was "one of the meanest guys [he'd] every met," Biden proclaimed: "At least there was civility. We got things done."
One would like to believe Biden naively mistook the facade of respectability that Southern elites of that era--both Talmadge and Eastland were plantation owners--sought to cloak themselves in by joining all-White Citizens' Councils, as opposed to joining the terrorist KKK. The ugly reality, as noted by PBS, was that, under Eastland's leadership, the Mississippi White Citizen's Council "fostered a violent, reactionary climate where punishment against blacks was sanctioned."
Biden is simply hiding behind "civility" to conceal the fact that, all too often, he shared portions of the same anti-democratic agendas embraced by vile segregationists, by his "Republican friends," and by his Wall Street donors.
Examination of his "disastrous" legislative history, however, reveals Biden is simply hiding behind "civility" to conceal the fact that, all too often, he shared portions of the same anti-democratic agendas embraced by vile segregationists, by his "Republican friends," and by his Wall Street donors.
Biden claimed he took part in civil rights marches. He didn't. At the recent debate, Biden said, "I didn't oppose busing in America." In 1975, Biden described court-ordered busing as "asinine" and lamented that a constitutional amendment may be needed to end it. The former VP voted against two of President Jimmy Carter's African-American nominees, to the U.S. Department of Justice and for Solicitor General, because they supported busing to achieve school integration.
Biden cites civility as a means to get things done. It's the things he gets done that are the problem. He personally authored many of the major crime and "war on drugs" bills that led to mass incarceration, which now disparately impacts the poor and people of color.
At this moment, the gravest threat to the survival of our democracy arises from the symbiotic relationship between an ever-expanding economic and political inequality--an inequality so stark that President Carter lamented it has already given rise to "an oligarchy with unlimited political bribery."
Biden voted to strip away bankruptcy protections from the victims of the usurious credit card industry. He voted to repeal Glass-Steagall, the Depression-era law which prevented commercial banks from participating in Wall Street's oft-fraudulent speculations. That repeal played a major role in the 2008 financial meltdown. Biden then completed the coup de grace to Wall Street accountability by voting in favor of the massive Wall Street bailout.
If there had been any doubt that voting to nominate Joe Biden as the Democratic Party presidential nominee would be akin to helping dig our democracy's grave, those doubts were eliminated when, in responding to Bernie Sanders's direct challenge to extreme inequality and oligarchy, Biden assured his wealthy Wall Street donors that there would be no fundamental change to their obscenely lavish standards of living under a Biden presidency.
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