A lot of things started shaking loose last week, and not just in Haiti. The Scott Brown senate seat victory in Massachussetts shook loose a Democratic “super-majority” that only had to be constructed because the US Senate stupidly turned the filibuster into standard operating procedure where it once was a seldom-used procedural dodge employed strictly by villains seeking to paralyze the chamber. Thanks to the new system, the senate is now in a continual state of paralysis.
The election in Massachusetts prompted President Obama to understand that the voters were pissed off — among other things — about the special privileges of banks and bankers, after a year of force-feeding them taxpayer money like Strasbourg geese. So he outlined a bank discipline offensive that sounded an awful lot like the return of the Glass-Steagall Act — which several of his top advisors (Summers, Rubin…) had a direct hand in repealing a decade ago — only without proposing to reinstate Glass Steagall. Go figure. Note: for all the bluster, Mr. Obama did not mention activating the moribund Department of Justice, where Attorney General Eric Holder has been in a coma all year. Somebody ought to inform the president that he has an entire criminal investigation division there, and that a little brisk leadership could gin them up into action as they were following the Savings and Loan scandals of the 1980s (when Republicans were in power, by the way).
Now, one big question is how come the president waited until after the Massachusetts election debacle to man up with the banks? Did it only just come to him that they were looting the nation — with government assistance? Pretty obviously nobody will believe that Mr. Obama is sincere about reigning in fraud-ridden Wall Street until he issues pink slips to the Goldman Sachs alumni who have been running him like a radio-controlled monster truck: Summers, Geithner, Rubin, et al. There was a hint of that last week, when the president made his statement with “the big guy,” Paul Volker, standing right behind him. Fed Chief Ben Bernanke and Treasury Secretary Geithner have both claimed more than once that they are “not regulators.” That must partly explain the absence of meaningful regulation all year. My guess is that Geithner is about to be tossed overboard like a feculent weiner, and that the president is praying for the senate to vote against Bernanke’s reconfirmation this week.
The underlying reality is that the financial sector of the economy has got to shrink. It ballooned from about five percent of the US economy to about 22 percent over the last two decades — mainly as a way to compensate for our declining real productive activity as we off-shored and outsourced and disassembled US industrial capacity. Capitalism only works when it operates in the service of productive activity. Trading mere paper certificates (or digital simulacra of them) in ever more “innovative” (i.e. abstract and incomprehensible) ways is not a substitute for making goods. These practices reached such a grotesque level of unreality that they eventually poisoned what remained of our economic prospects. Now that their operations have been revealed as perfidious, these institutions have to be sliced and diced and, in some cases, punished, perhaps with extinction. It will happen anyway. The only question is whether civilian leadership can guide the process within the rule of law. In the meantime, the derivatives rackets that made up so much of the fraud — especially the trillions of dollars vested in credit default swaps contracts — are ticking out there like bombs placed by madmen, and may bring down the entire global money system before an orderly downsizing of finance can occur.
The larger underlying reality is that the United States as an entire, integral organism, has got to contract, downscale, and reorganize. The mandates of energy resource reality demand it. We can’t maintain our way of life at its current scale and we have to severely rearrange and rebuild the infrastructure of it if we expect to continue being civilized. We have to get the hell out of suburbia, shrink our hypertrophic metroplexes, re-activate our small towns and small cities, reorganize the way we grow our food, phase out the big box retail (and phase in the rehabilitated Main Streets), start making some of our own household goods, and hook up the far-flung reaches of this continental nation with a public transit system probably in the form of railroads. By the way, there are plenty of “jobs” in this process, only not the kind of work we’ve been used to… sitting in cubicles or assigning tanning booths.
No amount of wishing for techno rescue remedies, or techno-triumphal fantasies, will overcome this basic reality. This is change you have to believe in whether you like it or not. Most of America doesn’t like it and doesn’t want to think about it and is doing everything possible to prop up the old arrangements. Bailing out the banks is just a lame attempt to keep banking oversized. Bailing out the automobile companies was just a way to avoid the recognition that Happy Motoring will soon be over. Bailing out Fannie Mae and Freddie Mac was just a way to avoid understanding that suburbia is finished. The “green economy” that so many people idly blather about — imagining that it will just mean running WalMart by other means than oil — is actually an economy of awesome stringency. It’s nothing like they imagine. It’s a world made by hand.
We should be turning our efforts and our remaining resources toward the task of becoming that differently-organized, finer-scaled society. The money that went into propping up the automobile companies could have been used to rebuild the entire railroad system between Boston and the Great Lakes, and the capital squandered on AIG and its offshoot claimants could have rebuilt everything else the rest of the way to Seattle. Is it really so hard to imagine what history requires of you?
Apparently so. That’s why movements like Naziism start. If there ever was another nation beautifully primed for an explosion of deadly irrational politics, it’s us. And it looks to me as if that’s exactly what we’re going to get — especially now that the Supreme Court has made it possible for corporations to buy elections lock, stock, and barrel. I hope our constitutional law professor president turns his attention to proposing a legislative act that will sharply reign in the putative “personhood” prerogatives of corporations. They are relatively new entities in legal history, and their supposed “rights,” duties, obligations, and limits have been regularly subject to re-definition over the past hundred years. There’s no reason to believe that the court’s current ideas are definitive. In fact, they are completely crazy — given the fact that the fundamental character of corporations is sociopathic, insofar as their only express allegiance is to their shareholders, meaning they are devoid of any sense of the public interest, meaning they are unfit to participate in electoral politics.
Finally, I note the sad untimely death last week of the great Kate McGarrigle, 63, who with her sister Anna produced some of the finest music of a generation that was transcendentally saturated by music. They were folkies at the height of the rock and roll era, but their beautiful harmonies and lyrics rose above the din.