It still seems astonishing to me that, despite the evidence that they simply can't be trusted, the people who got us into the mess we are in--the rabid "free marketeers"--still seem to have jobs--and are being asked to continue to serve in our government and are sought after for advice. While certainly I am making an ideological argument, I also think the hard economic facts speak for themselves.
Remember, over the past 30 years, we have had more than one asset bubble popping or calamity that struck the country (and the world)--all attributable to the people who preached the wonder of the "free market". There was the savings and loan crisis on the 1980s, the Internet bubble, and now the housing bubble.
Each time, there are millions of victims--mainly, hard-working Americans and a lot of people around the world who live on two dollars a day--but the "free marketeers" still keep on trucking and scamming the system.
The traditional press alternately refers to the current wealth destruction as an earthquake or a tsunami. But, those descriptions are way off base because both of those metaphors give the impression of a sudden, unforeseeable natural disaster that could not be predicted or contained.
All this could have been—-and was—-predicted and was roundly ignored. A few skeptics routinely predicted a coming, disastrous popping of the housing bubble—-but they were routinely ignored and dismissed, as if they were raining on a party that would just keep going and going. The party the "free marketeers" wanted to just keep on feeding.
If the point of an economy is to bring economic security and long-term well-being to the citizenry, the "free marketeers" have utterly failed.
Here are just a few examples.
Exhibit #1: Citigroup. Can anyone explain to me why anyone should listen to Robert Rubin...ever again? He was one of the leading voices arguing that increased debt and leverage were a good thing for the economy. Citigroup--where Rubin has presided as chairman and now serves as a senior director-- has posted four consecutive quarters of losses and has written off billions of dollars. According to today's New York Times, "nine of its investment funds have cratered this year. And now the bank could face a tsunami of new losses in its once-lucrative consumer loan business as the global economy weakens". But, long before the current collapse, the bank played a central role in underwriting the subprime mortgage and credit-default swap markets.
Understand the mentality here, expressed by the bank's CEO Vikram Pandit:
"We are entering 2009 in a strong position, much stronger than we entered in 2008," Mr. Pandit said in a speech to employees this week. "We will be a long-term winner in this industry."
Strong position--after axing 52,000 workers. There you have it: they made a mess of the economy but dumping tens of thousands of workers is seen as the right step to make the company strong again.
Why would anyone want Rubin, or any of his acolytes from Goldman Sachs, touching any part of the economy again? The man has totally failed.
Exhibit #2: in the past two days, the Dow has dropped almost 900 points. These days, the rare times the market goes up is during the early part of the day when people try to game the system and make short-term profits--and, then, they get out two hours before the market closes and the market plummets. No one has any faith in the economy--it's all about "what can I grab for myself before the whole house caves in".
It isn't just the Dow:
The Standard & Poor’s index of 500 stocks fell by more than 6 percent on two consecutive days, Wednesday and Thursday, something that had not happened since July 20 and 21, 1933, in the midst of the Great Depression, when panic was brought on by collapsing commodity prices. Such prices have fallen rapidly this week as well, as evidence mounted of a world recession. The index is now at its lowest level in 11 years.[emphasis added]
Nine TRILLION in stock market wealth has gone poof in the past 13 months--not to mention trillions of dollars in housing wealth that has evaporated...and more to come.
Yet, as far as I can tell, the "free marketeers" have not stepped forward and said that we need to protect seniors and, to do so, we need to go back to a system anchored on defined benefit pensions that are far more insulated from stock market bubbles. Instead, millions of seniors are screwed.
Exhibit #3: the "free marketeers" like to wax on about how the wonders of the "free market" bring prosperity and wealth to the country. That has been a lie for a very long time. You know the American ethos: work hard and you shall be rewarded. That has been a life for at least three decades. If, over the past 30 years, wages had tracked productivity--you know, everyone working hard and making things more efficiently--the minimum wage would be href="9.12 today. Since 2001, productivity has grown almost three times faster than wages.
The bottom line: we have worked like dogs in the "free market" and, yet, we have nothing to show for it. The promise of the "free marketeers" turned out to be a lie.
Exhibit #4: the "free market" often likes to talk about how it rewards hard work and success. Another lie. Take Robert Nardelli, the CEO of Chrysler. Remember, how he boldly offered to take only $1 in salary if the Congress approved the bailout of the auto industry (a bailout that I have supported here, here and here). Well, how short how memories are. Nardelli can afford to get paid $1 a year because he already pillaged another company.
During a six-year stint as CEO of Home Depot, Nardelli took home $64 million even though the company did very poorly; in one year, he pulled down $38.1 million. His board of directors finally revolted when he refused to accept even a symbolic reduction in his stock package--though he agreed to give up a guarantee that he wouldn’t necessarily receive a minimum $3 million bonus each year, he refused to tie his future stock awards to shareholder gains. He was finally forced out of the company but walked away with a $210 million severance deal.
So, the phony meme that CEOs, and the rest of the prophets and leeches of the "free market", only benefit when the "free market" prospers is just utter BS.
I could go on. You get the picture.
FEEL FREE TO POST YOUR FAVORITE, FACT-BASED EXAMPLE SHOWING HOW THE "FREE MARKET" HAS FAILED.
I do not want to turn this post into a rant about the emerging shape of the new Administration. But, it is fair to ask this question:
If we want real change, we have to jettison a philosophy that, on the merits and on the facts, has failed to deliver. And to wipe the slate clean and chart a real new course for the economy, those who brought us to this moment have to be fired.