No to Socialsm, Yes to Corporatocracy!

The Tea Bag Movement, the Republican Party and the right-wing pundits are all claiming that Obama and the Democrats are socialists. Let's call these groups the 'anti-socialists.' They believe that Obama wants government ownership of everything. They claim that people should be able to control their own destinies, their own economic choices and their own health care. They are against government regulation and against social assistance. But, what history has shown is that without sufficient regulation, society becomes very unbalanced.

For example, in the 19th century the Robber Barons took advantage of an unregulated banking and commercial system. They amassed enormous personal wealth. In response to the Great Depression of 1929, Congress enacted banking regulations in 1933 known as the Glass–Steagall Act which introduced banking reforms. It wasn't until 1999, that certain provisions that prohibited a bank holding company from owning other financial companies were repealed by the Gramm–Leach–Bliley Act.

It was the Glass-Steagall Act that prohibited any one institution from consolidating an investment bank, a commercial bank, and an insurance company into one entity. The Gramm-Leach-Bliley Act then allowed commercial banks, investment banks, securities firms, and insurance companies to consolidate. A bi-partisan congress passed the Gramm–Leach–Bliley Act and President Clinton signed it into law.

Recently, President Bill Clinton said that even before the repeal of Glass-Steagall the principles of the legislation had been breached. "Clinton said he regretted not trying to regulate derivatives."

“On derivatives, yeah I think they were wrong and I think I was wrong to take [their advice] because the argument on derivatives was that these things are expensive and sophisticated and only a handful of investors will buy them and they don’t need any extra protection, and any extra transparency. The money they’re putting up guarantees them transparency.” [...]

Clinton said he regretted not trying to regulate derivatives, but that Republicans would have stood in the way. “Now, I think if I had tried to regulate them because the Republicans were the majority in the Congress, they would have stopped it. But I wish I should have been caught trying. I mean, that was a mistake I made.”

That brings us to today.

During a recent interview on Bill Moyers Journal with economists James Kwak and Simon Johnson, Bill Moyers discussed with his guests the devastating financial crisis of '08. The discussion focused on "whether the financial powers are more profitable, and more resistant to regulation than ever."

Bill Moyers: Let me get to the blunt conclusion you reach in your book. You say that two years after the devastating financial crisis of '08 our country is still at the mercy of an oligarchy that is bigger, more profitable, and more resistant to regulation than ever. Correct?

Simon Johnson: Absolutely correct, Bill. The big banks became stronger as a result of the bailout. That may seem extraordinary, but it's really true. They're turning that increased economic clout into more political power. And they're using that political power to go out and take the same sort of risks that got us into disaster in September 2008.

Bill Moyers: And your definition of oligarchy is?

Simon Johnson: Oligarchy is just- it's a very simple, straightforward idea from Aristotle. It's political power based on economic power. And it's the rise of the banks in economic terms, which we document at length, that it'd turn into political power. And they then feed that back into more deregulation, more opportunities to go out and take reckless risks and-- and capture huge amounts of money.

Bill Moyers: And you say that these this oligarchy consists of six megabanks. What are the six banks?

James Kwak: They are Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo.

Bill Moyers: And you write that they control 60 percent of our gross national product?

James Kwak: They have assets equivalent to 60 percent of our gross national product. And to put this in perspective, in the mid-1990s, these six banks or their predecessors, since there have been a lot of mergers, had less than 20 percent. Their assets were less than 20 percent of the gross national product.

Bill Moyers: And what's the threat from an oligarchy of this size and scale?

Simon Johnson: They can distort the system, Bill. They can change the rules of the game to favor themselves. And unfortunately, the way it works in modern finance is when the rules favor you, you go out and you take a lot of risk. And you blow up from time to time, because it's not your problem. When it blows up, it's the taxpayer and it's the government that has to sort it out.

Bill Moyers: So, you're not kidding when you say it's an oligarchy?

James Kwak: Exactly. I think that in particular, we can see how the oligarchy has actually become more powerful in the last since the financial crisis. If we look at the way they've behaved in Washington. For example, they've been spending more than $1 million per day lobbying Congress and fighting financial reform. I think that's for some time, the financial sector got its way in Washington through the power of ideology, through the power of persuasion. And in the last year and a half, we've seen the gloves come off. They are fighting as hard as they can to stop reform.

Simon Johnson: I know people react a little negatively when you use this term for the United States. But it means political power derived from economic power. That's what we're looking at here. It's disproportionate, it's unfair, it is very unproductive, by the way. Undermines business in this society. And it's an oligarchy like we see in other countries.

Today, six banks control 60% of the Gross National Product (GNP) which according to Simon Johnson and James Kwak is considered an oligarchy.

This brings us back to the 'anti-socialists.' They are extremely fearful. They rant and rave that President Obama wants the federal government to own all means of production. Although they accept their medicare payments and social security checks, they have railed against the recent health care legislation even though it is an insurance company for-profit health care plan.

What is the anti-socialist position on the issue of economics and banking regulation? Are the anti-socialists content with an oligarchy of our banking industry? Are they ranting and raving, yelling and screaming, demonstrating against the corporate oligarchy (corporatocracy) of banking? Are they outraged that only 6 banks own 60% of GNP?

Sarah Palin:

Palin apparently thinks that the solution to our economic mess in the United States is less government regulation rather than more to rein the bankers and Wall Street in for their bad behavior.

Tea Party:

This movement is against stronger regulation. As Republicans softened their stance against the financial regulation bill, tea partyers reacted by lashing out against the GOP.

GOP Conservatives:

For conservatives the best bank regulation is no regulation. Conservatives, of course, think we need less regulation, not more.

Judging from the rallies on Wall Street yesterday, the capitalists haven't bought into the GOP talking points about socialism quite to the extent of the Glenn Beck/Rush Limbaugh crowd of modern day Know Nothings. But if you think the conservatives dig in on healthcare reform, just watch them on financial reform-- the real line in the sand for the representatives of institutionalized Greed and Selfishness.

After foot (and knuckle) dragging all year, the GOP was left out of the final legislation entirely-- although far, far too many of their reactionary demands were met as Dodd and the Democrats compromised with good sense for no reason, unless currying favor with the banksters is considered reasonable in Inside the Beltway Democratic circles. Yesterday the Senate Banking Committee approved Dodd's financial overhaul legislation 13-10, without a single Republican vote.

The 10 crooked, bribe-taking handmaidens of the Wall Street banks who have vowed to throw themselves under the bus of progress are Richard Shelby (R-AL- $5,213,130), Robert Bennett (R-UT- $2,354,767), Jim Bunning (R-KY- $2,580,305), Mike Crapo (R-ID- $1,728,513), Bob Corker (R-TN- $3,058,330), Jim DeMint (R-SC- $2,463,860), David Diapers Vitter (R-LA- $2,083,149), Mike Johanns (R-NE- $687,621), Kay Bailey Hutchison (R-TX- $4,702,438) and Judd Gregg (R-NH- $1,077,149).

Dodd says his bill will end taxpayer-funded bailouts of companies supposedly "too big to fail," regulate-- for the first time-- the multitrillion-dollar derivatives market, and bring long-overdue consumer protection to financial products. The Republicans have watered down the most important aspects of real reform and are expected to filibuster the eventual bill, no matter how weak and crappy the Democrats make it to please them. Sound familiar?

WATCH Fox News explain the Republican position.

Are you confused yet? Totally. The Fox News guy says that there are already enough laws on the books to handle every economic situation. Both he and Professor Bill Black seem to be blaming the economic situation on both Obama, Geithner and the Democrats. But on April 3, 2009, Bill Black was interviewed by Bill Moyers. Here is what he had to say. Click HERE to watch the program.

BILL MOYERS: If I wanted to go looking for the parties to this, with a good bird dog, where would you send me? WILLIAM K. BLACK: Well, that's exactly what hasn't happened. We haven't looked, all right? The Bush Administration essentially got rid of regulation, so if nobody was looking, you were able to do this with impunity and that's exactly what happened. Where would you look? You'd look at the specialty lenders. The lenders that did almost all of their work in the sub-prime and what's called Alt-A, liars' loans.

The anti-socialists want small government, individual liberty, and free markets. They don't want any banking regulation. They don't want government control. Yet, what we now have is a corporate oligarchy which controls our economic system and inhibits individual freedoms and free markets.

The right-wing motto has now become: No to Socialism, Yes to Corporatocracy!