As President Obama started his first term in office he was provided with the kind of opportunity for real change that progressives had only been able to dream about for nearly a century. The deregulation of the financial industry had been shown to be a huge mistake, and the whole neoliberal project was being openly questioned. He had been elected on a ticket of “hope and change” and would never have a greater chance to be true to his claims of real change. In the 1930’s, then President Roosevelt had used the opportunity of a market and economic crash to tame the financial industry and prosecute many of the worst criminal offenders.
The job of the financial system is to serve the real economy, and it has historically done that well when heavily restricted and heavily regulated to limit the possibility of financial risk taking and abuse. When the bankers are boring the real economy tends to do well, when the bankers are “masters of the universe” the real economy tends to do badly. Making the financial system more “efficient” through deregulation and “innovation” has been seen to provide greater risks for society and the inevitability of greater law breaking. Much of such “innovation” has been in ways to escape regulation, as with the ability to write insurance contracts structured as “credit derivatives” with no oversight from the insurance regulators. The history of the financial system since the start of deregulation after the late 1970’s has been one of one crash after another that has required government rescues – the privatization of risk-driven profits and the socialization of risk-driven losses.
The new President had the chance to return the financial system back to its real purpose and to put an end to needless speculation, and extensive illegality, as President Roosevelt had done in the 1930’s. Instead, he threw the chance away and rescued the bankers without gaining any real change in return. The economic and political power of the banking industry was left in place, together with its ability to live off the real economy. Within a year the executives of Goldman Sachs, that had faced outright bankruptcy, were revelling in the usual huge bonuses. Roosevelt also used the shock of the 1930’s to put in place basic government social support schemes and legal protections for unions. With Democratic majorities in both the Senate and the House, together with the legitimacy of neoliberalism openly being questioned, Obama could have driven through a truly progressive agenda. Real change, rather than just the hope of it.
We are now living with the end result of the failure to take advantage of the historic opportunity of those six months. With Obama’s two terms delivering little or no real benefit to “Main Street”, and the Democratic nominee promising more of the same, the voters looked for a provider of real change. In desperation they picked the fake populist change-agent Trump, a fully paid-up member of the billionaire class. He has committed to further deregulate the financial industry, provide even lower taxes for the rich, bribe corporations to bring jobs back on-shore, and the effective destruction of environmental regulations.
At a time when drastic action is required on climate change, the last thing that was needed was a doubling down on the “drill baby drill” mentality, the exponential growth of financial risk taking, and continued arrogance in the face of ecological limits. A future incoming President may have to deal with the financial, economic and environmental consequences. Hopefully, they will provide more real change than meaningless hope when given the chance. Without the pressure of strong progressive social movements to hold that Presidents feet to the fire, another chance may be missed. The first step will be for the true progressives to at last give up on the corrupt, co-opting, Democratic Party and start a new political movement.