Charles Ferguson is the director of the new documentary, “Inside Job”, which is generating a lot of buzz. It is narrated by Matt Damon, and explains the financial crisis that began in 2008 and continues to this day. Ferguson has contributed an article to the War Room blog at Salon.com, and it’s a stunningly clear indictment of the plutocracy that has taken over both the American economy and its political system. Please, do yourself a favor, and read the entire thing.
Did you read it? Good, now we’re ready to continue. Here’s the part that I’d really like to draw your attention to (emphasis mine):
It is, in short, overwhelmingly clear that President Obama and his administration decided to side with the oligarchs — or at least not to challenge them. This raises the question of why they have made this choice, and whether it is a correct (in the sense of rationally self-interested) calculation on their part.
As to the “why,” several explanations have been proposed. One is that the president, as a matter of individual psychology, is extremely conflict-averse, preferring to avoid fights no matter how important. A second hypothesis is that the president is simply doing the most he can, given the political climate and the furious lobbying effort with which he is confronted. This explanation, however, is belied by the personnel appointments, among other evidence.
A more disturbing possibility is that the Obama administration has simply codified a new strategic equilibrium in American politics, one first devised by the Clinton administration, in which both parties are supine with regard to the financial sector and the wealthy.
… If the two parties both lie down for Wall Street in roughly equal measure, but fight viciously over other issues, it is possible to construct a stable strategic equilibrium. At the margin, the Democrats are slightly less favorable to business, at least for unionized industries, but nobody upsets the financial sector apple cart…. the two parties fight furiously, or at least pretend to fight furiously, about a wide range of other social issues that affect many voters deeply — abortion, gay rights, gun control, stem cell research, creationism, global warming, health insurance and so on. Each side can credibly warn its base that if it deserts the party, apocalypse may follow. So, while some citizens may register as independents, or stop voting, or stop donating to the system, the entrenched establishments of both parties will remain safe.
And that’s all you need to know about American politics for the past few years. The plutocrats have hit upon a winning strategy. The American public, confused and afraid, vacillates between the only two political parties with any clout. Pervasive fraud, corruption, corporate welfare, and special interest influence turn the public’s collective stomach, and they lurch for the remedy– throw the bums out. Unfortunately that just brings in a new bunch of bums, and the cycle repeats. Economist Simon Johnson has been one of the clearest voices on this issue, and it’s something he’s termed the “Quiet Coup“:
…elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.
Top investment bankers and government officials like to lay the blame for the current crisis on the lowering of U.S. interest rates after the dotcom bust or, even better—in a “buck stops somewhere else” sort of way—on the flow of savings out of China. Some on the right like to complain about Fannie Mae or Freddie Mac, or even about longer-standing efforts to promote broader homeownership. And, of course, it is axiomatic to everyone that the regulators responsible for “safety and soundness” were fast asleep at the wheel.
But these various policies—lightweight regulation, cheap money, the unwritten Chinese-American economic alliance, the promotion of homeownership—had something in common. Even though some are traditionally associated with Democrats and some with Republicans, they all benefited the financial sector.
Ferguson references the Quiet Coup in the last paragraph of his post as well:
So, then, the Obama administration’s choices may be depressingly rational, given the “quiet coup,” to use Simon Johnson’s term, constituted by the spectacular rise of the financial industry and the wealthy over the last quarter-century. This does not mean we should all despair; there have been times before in American history when the American people had to force their leaders to follow them. A century ago, the progressive movement achieved major reforms in the face of an economy even more concentrated than today. But it won’t be easy. To reverse the hegemony of the financial sector, and the danger it poses both to economic stability and to real democracy, will require an enormous outpouring of popular anger and organizational energy, probably a considerable period of time, and perhaps could be generated only by … another, even worse, financial crisis, such as might well occur a decade hence, given the absence of real reform after this one…
I think he’s right about the need to organize to change the course the country is on, but I do not hold out much hope that the public is up to the task. Please, somebody, prove me wrong.