Wednesday, December 27, 2017

You Can Bank On It

It is pretty difficult to make a non-partisan argument around the recent tax code changes adopted by the Republican Party which owns the government from top to bottom. For it is entirely a partisan idea and decision. Not that the Democratic Party has been the beacon of progressive tax reform.

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Ron Formisano, a professor emeritus of history at the University of Kentucky indicts the entire 'political class' with our current dilemma. In his new, but seldom read book, American Oligarchy: The Permanent Political Class (University of Illinois Press, 2017), he unleashes the muckraking style of the last era of robber barons by famed journalists Ida Tarbell, Upton Sinclair, Lincoln Steffens, C. Wright Mills, etc. Through 210 pages of lucid prose supported by another 60 pages of detailed footnotes, Formisano lays bare the corruption endemic to the political class and how its capture of our American Society has established a fully formed oligarchy. For more on the 'capture'  component see also Sen. Sheldon Whitehouse's Captured I reviewed earlier this year.

Formisano doesn't just pick on the elected officials and the jurists but the corporate heads, higher education administrators, and even the heads of nonprofits. Of course the grease in the system is money and wealth. The increasing gap between the bottom and top has been expedited by the political class which has no real ongoing connection to the middle and lower classes. Even more telling for Formisano is the capture of the economy by the financial sector. This is a growing concern even for conservative institutions like the International Monetary Forum which noted in a recent report cited by Forisamo that "excessive financialization of the U.S. economy reduces GDP growth by 2% every year...a massive drag in the economy -- some $320 billion per year." (p.194)

And the gap between the rich and the rest of us grows as well as Bloomberg reported today "World's Wealthiest Became $1 Trillion Richer in 2017"





Page after page demonstrates how even persons entering government or nonprofits with good public intentions get absorbed into the political class. The sharing of board members, the lobbyist favors, inside relational contracting, shared vacations and junkets all corrupt any pretension of democratic principle. He notes that while both Trump and Sanders spoke to the idea of corruption of power,  Trump of course has blatantly turned over the executive branch to these same members of the oligarchy. While the book does read in the style of Tarbell, Steffens, Mills, Sinclair, and more recently recently deceased political scientist Chalmers Johnson, he does not offer us any roads out of this mess.



One direction from a recent book, which likewise probably has equally few readers, is offered by K. Sabeel Rahman. In his recent Democracy Against Domination, Rahman, a former Rhodes Scholar who studied economics, political theory and law at Harvard and Oxford  teaches law at Brooklyn Law School. Rahman's style is more turgid and aimed primarily  at other academics I suspect but his argument is fresh and worth pondering.

"This progressive economic vision suggests a radically different approach to financial regulation.  The book argues that our prevailing approach to TBTF [too big to fail] finance relies too heavily on a faith in insulated, neutral, top-down regulation by experts, despite the risks of industry lobbying or the complexities of trying to manage the modern financial system.  Instead, the book suggests that a better approach would place stricter, structural limits on TBTF financial firms, whether by “breaking up the banks” or by regulating finance as a kind of public utility.  Drawing on the latest thinking in economics and law, the book suggests how we need to revamp our financial stability regime."

He sees the failure of leaving the regulating the economy and the corporate sector to 'experts', for which I assume he would include himself, and calls for a much deeper and vibrant model of democracy. I believe his argument on this particular failure is well done - this attack on the "let the experts rule". He shows the underbelly of this flawed approach, but not as poignantly as Sen. Whitehouse did in his book. But his reasoned call for a deeper democracy to address the domination of the 'political class' as Forisamo names it is stronger than what  either Whitehouse or Forisamo offers.


Still I failed to see a systemic plan of specific options to address the flaws. Here's where I would point to the Austrian Economist Christian Felber's remedies he laid out in his 2016 Change Everything: Creating an Economy for the Common Good that I shared in 2016. While the piling  evidence makes crystal clear to anyone wanting to look at it that our economic system as run by the' 'plutocracy' Formisano shines his piercing light on is cascading us towards a twin abyss of increasing inequality and climate destabilization.

Sunrise Movement

While the path out of this is a bit murky, the recent tax law disaster is going 180 degrees in the wrong direction. One promising approach before us in 2018 is following the lead of the youth led Sunrise Movement. One of their suggested strategies is to approach candidates for office at all levels and ask them to pledge not to accept money from the oil, gas, and coal lobbies. I would add the financial industry.

It is our youth who will have to lead us out of this mess as they are the ones that will be forced to live with the worst of what we have sown.