In today's disappointing New York Times column, Paul Krugman correctly blames the predatory financial industry for "undermining our economy and our society."
But he refrains from blaming the political system in general and the Obama administration in particular, even though "there is a clear correlation between the rise of modern finance and America’s return to Gilded Age levels of inequality." Instead, he writes that "we" are giving vast amounts of public money to the same people who screw the little guy every single minute of every single day (the words after "we" are mine, not Krugman's).
Besides never defining "we" he was vague about who to blame besides the greedy "flash boy" sociopathic traders highlighted in the recent bestseller by Michael Lewis. Instead, he laments that unfathomable piles of money are simply going to waste:
How much waste are we talking about? A paper by Thomas Philippon of New York University puts it at several hundred billion dollars a year.
Mr. Philippon starts with the familiar observation that finance has grown much faster than the economy as a whole. Specifically, the share of G.D.P. accruing to bankers, traders, and so on has nearly doubled since 1980, when we started dismantling the system of financial regulation created as a response to the Great Depression.
What are we getting in return for all that money? Not much, as far as anyone can tell. Mr. Philippon shows that the financial industry has grown much faster than either the flow of savings it channels or the assets it manages. Defenders of modern finance like to argue that it does the economy a great service by allocating capital to its most productive uses — but that’s a hard argument to sustain after a decade in which Wall Street’s crowning achievement involved directing hundreds of billions of dollars into subprime mortgages.
If there was a Republican administration cop not only asleep on the beat, but cheering the criminals on, I think Krugman would be naming names in this latest column. Actually, he does name Chris Christie, but only to compare the flash- trading fiber-optic tube under the Hudson River with the New Jersey governor's own canceled commuter tunnel. Democrats, as usual, receive Krugman immunity from polemical prosecution.Wall Street’s friends also used to claim that the proliferation of complex financial instruments was reducing risk and increasing the system’s stability, so that financial crises were a thing of the past. No, really.
So, here is my published comment to Mr. Krugman:
There's a bill floating around that would slap a tax of only three pennies per $100 on those scammy high speed trades. It would raise an estimated $352 billion over ten years. Think of all the projects for the greater social good that such a tax could fund. Schools, jobs, infrastructure repairs, expansion of Social Security. What a great first step toward leveling the playing field and fighting back against the worst income inequality since the Gilded Age!
But guess who's adamantly opposed to this mild Robin Hood tax? President Obama, that's who. He's afraid that upsetting the volatile market would make Mr. Market more volatile. It's the same excuse his Attorney General uses for not prosecuting the Wall Street mob. Their rackets might actually lose money. Their feelings might get hurt. Jamie Dimon might move JP Morgan Chase out of the country. And then where would all the money for the election of complicit politicians come from?
Meanwhile, senatorial leaders like Chuck Schumer (D-Wall Street) openly complain to all who will listen that the vampires of finance are being unfairly demonized. "Left-wing blogs are the mirror image of the Tea Party," he fumed to The New Republic a few months ago. "They just have less credibility and less clout."
With Dem friends like that, who needs the Grand Guignol Party? Tax the rich, jail the banksters, ban legalized bribery, impeach half the Supreme Court, support Sanders and Warren.
Otherwise, it's R.I.P. democracy.For a more refreshing overview of reality, here's a Guardian piece by Glenn Greenwald, which also links to the excellent PBS documentary "The Untouchables." The film, which aired a year ago, does place the blame for our continuing economic woes squarely upon the political corruption within the Obama administration. The film was so scathing that Holder henchman Lanny Breuer was forced to quit within days of its airing, purely for appearance's sake of course. Meanwhile, the gambling continues, and all the pundits express shock whenever a new blockbuster bestseller hits the stands and repeats the same old story over and over and over again.