I just caught the end of an NPR interview of Henry “Hank” Paulson, Bush’s Secretary of the Treasury, who was hawking his new book about the financial crisis of 2008. Several things struck me about what he said:
1. He referred to the Ronald Reagan Library as a “Temple of Capitalism.”
I can’t think any more revealing quote I’ve heard from a “Wall Street” Republican — the ones who really control the GOP, at least in terms of the ideology of free markets which has a firmer hold on the actions of Republican politicians than even Fundamentalist Christianity.
Here was a man who had made the decision to bailout Wall Street (I doubt we can credit Bush with coming up with this idea), a man who was the overseer of a massive government intervention in which billions of dollars were funneled to the largest banks and financial firms in the country, frankly saying that this action was necessary to prevent a 2nd Great Depression. Nonetheless, you could tell that he felt distressed by the mere thought that the Federal Government had to be a prominent actor in stabilizing financial markets.
He literally seemed ashamed that he would be known as the Treasury Secretary most associated with bailouts. No wonder he kept so much of the actual transfers of funds secret, and placed little if any controls on how the bailed out banks could use the funds. We all know that while he was in charge of the Treasury special deals and favors were given to his “friends” at Goldman Sachs and Morgan Stanley.
Yet, deep down his actions were triggered by more than these close associations. He only acted after it was too late to do anything to prevent the collapse of the derivatives bubble other than a bailout. To men like Henry Paulson, capitalism as we know it in the late 20th Century isn’t an economic system which has flaws and often creates extreme inequalities in wealth and speculative “bubbles” that lead to wild swings in economic activity, it is a God they worship, and places like the New York Stock Exchange, the University of Chicago and Ronald Reagan’s library are his God’s most sacred, holy places.
So who does Paulson blame for what happened in the great financial meltdown of 2008? You and me. Which brings me to my second point:
2. Paulson stated that the fault with the American economy lies in the fact that Americans spend too much on consumer goods and do not save enough.
An interesting viewpoint to be sure. You see, Paulson has to literally go against the tenets of his own religious faith in Free Markets here when he blames you and I (and the Government also) for spending more than we save. Yet, the reality is that Paulson was part of a system that provided no incentive to save.
He had watched for years as Alan Greenspan kept interest rates low, fighting the dragon of inflation. He knew that such low rates were in large part responsible for the speculative bubbles in High Tech stocks and later in real estate. He also knew that de-regulation of financial institutions had allowed investment banks and insurance companies and stock brokers to all come together under one roof to create “financial products” which were of little value other than as a scheme to milk money from investors large and small.
He also knew that our economy has been based on ever increasing consumerism since at least the beginning of the 20th Century when Henry Ford and others revolutionized our economy through the the mass production of cheap goods and the rise of advertising and marketing to create a “need” in the minds of consumer for such goods.
Paulson had promoted policies which made it difficult for average Americans to aggregate wealth, since the rise in income among the poor and middle class has been stagnant (if not negative) since 1980. Policies of “free trade” under which which large corporations sent high paying jobs overseas to lower “labor costs” and laws that allowed corporations to avoid taxation through the use of off shore tax havens. Policies which promoted the profitability of large multinational corporations at the expense of smaller companies, thus eliminating creativity and competition in every industry.
It is no surprise that in 2010 we have a few large corporations which dominate entire industries, corporations which are ever more controlled by the managers who operate them rather than the shareholders. Mega-Corporations which have in large part created the economy we now have in America: one where we produce fewer and fewer manufactured goods, where good paying jobs are scarce, and where corporations have been allowed to gouge and take advantage of consumers because the regulatory institutions and structures which limited such predation have largely been eliminated or so weakened that they cannot protect consumers.
Yet, because Paulson sees his brand of Capitalism as a God that can do no wrong, he had to direct the blame for its failures elsewhere. So, like the God of Abraham in the Old Testament whose prophets blamed the Israelites’ lack of faith for all their troubles, he blames average Americans for not saving enough of their meager incomes. Like any man of faith, he is blind to the deficiencies and contradictions which are part and parcel of his “religion.”
When Scott Simon, the NPR interviewer called him on this (much too politely I thought) by pointing out that now, because of the current economic situation which Paulson failed to prevent, we need more spending by governments and individuals to fuel job growth (i.e., increasing demand), Paulson’s response was a feeble one indeed.
He said (and this is from memory so it might not be completely accurate, but the gist of his response is here), “Well, that’s the conundrum” before returning to his talking point about the necessity to curb government spending and increase individual saving. How this would magically happen, of course, was not explained by him. Presumably it would require all of us to have more faith in the Marketplace, to return to the fold of that Old Time religion to which Paulson bears his allegiance: unfettered, unregulated Capitalism.
Indeed. To men of faith any answer which their God cannot provide is a “conundrum” which, for the purposes of preserving their faith, must be ignored or elided. And to think that this was the quality of mind, the mindset of a religious fanatic, that directed our nation’s economy straight off a cliff during the Bush years.
Paulson, however, is but a symbolic stand-in for all those who subscribe to this dogmatic ideology. And sadly, many of these same “believers” are also members of the Democratic Party, both in Congress and in Obama’s administration. They may differ with Paulson on small matters, but on their larger faith in Free Markets, Free Trade and Raw Capitalism they all worship at the same Church.
