[Cross-posted to In Medias Res]
Over the weekend, a friend of mine shared an article which had joined in the Hillary Clinton-Bernie Sanders fight, a fight which may come to an end tomorrow in New Hampshire, but probably won’t. The title of the piece is “Bernie Sanders Doesn’t Know Diddly-Squat About Wall Street” (a claim which, from the author’s limited perspective, is undoubtedly true), and it acknowledges the truth of great many of the critiques of Wall Street’s behavior over the past decade which are being made by both the Clinton and Sanders camps. But the article’s overall critical aim is clear:
It is unconscionable that Wall Street’s compensation system continues to reward bankers, traders, and executives to take big risks with other people’s money in hopes of getting big year-end bonuses…But Sanders never talks about the compensation system on Wall Street. In fact, he rarely mentions anything concrete at all. Instead, he dwells on bizarre and nebulous notions such as imposing “a tax on Wall Street speculation”….The candidate’s website does not really flesh out the idea, other than to say that the tax “will reduce risky and unproductive high-speed trading and other forms of Wall Street speculation.” If one goes back to a bill that Sanders introduced in the Senate last May, there is slightly more meat on these bones; still, the proposed legislation seems to have very little to do with actually taxing “Wall Street speculation” and more to do with taxing every trading transaction–the buying and selling of stocks and bonds and derivatives–that Wall Street and hedge funds engage in. This, of course, makes no sense whatsoever–why tax the very behavior the system depends upon?
In other words, there are clearly bad actors on Wall Street, so why on earth would someone want to burden the whole system of Wall Street, as opposed to doing something to simply target those bad actors? The idea that Wall Street itself–or at least the high-end, high-speed, huge-money, over–financialized skewing of it over the past few decades–might be the problem here simply never crosses the author’s mind.
Let me expand on this somewhat discomforting point a little–discomforting because honest populists and socialists (and Sanders, though a career politician, is at least a little more honest than most) know that we are all far more affected by Wall Street practices than we’d like to admit. Indeed, we are all so affected by (and implicated in, and dependent upon) it that excavating the actual moral ideal at work in nearly all actually populist and socialist–as opposed to liberal egalitarian and redistributive–ideas is difficult, even though almost anyone who really thinks about it knows the point is there. Our profound inarticulateness over this point is owed, I think, to the fact that most modern leftism is bereft of the moral language which once animated anti-capitalist arguments generally, and thus those who advocate it–as Sanders does, however inconsistently–find it difficult to say what, on some deep and inchoate level, they clearly want to say. It is a point that, to their perverse credit, clear-eyed libertarian, propertarian, and other Lockean thinkers often recognize and put at the front in their attacks on actually socialistic ideas; some of them really delight in mocking their opponents for it, and those opponents fulminate usually rather hopelessly, because they believe in what they’re saying but they’re not entirely sure just what they’re saying actually means.
What point am I getting at here? To be curt, it’s simply this: “why tax the very behavior the system depends upon,” you ask? Easy. Because us populists and leftists and other vaguely socialistic types actually don’t like the system we’re all affected by, dependent upon, and implicated in, and consequently want it to do less of what it does. A financial transaction tax may have a variety of revenue-raising and redistributive pluses and minuses, but from a genuine populist/socialist perspective its greatest effect will probably be to simply make it at least slightly less likely that something we don’t like will be done. Both populism and socialism (and local traditionalism or distributism or what-have-you) can refer to a huge range of economic possibilities, but in the post-WWII, post-Cold War, globalized world, they both–whether their proponents realize it or not–basically mean the same thing: the elite generation and manipulation and moving around financial wealth has gone far enough. There ought to be less of it.
What would it mean for the Wall Street system (or, again, mainly the one which has emerged over the past generation or so) itself to see less activity? For taking on risk and collaterizing debt themselves to be seen as a less attractive means of generating capital? Well, as the article correctly points out, it would mean less absolute wealth would be generated overall (but that would also mean less inequality). It would mean investment would be less incentivized (but so would less ruinous speculation). It would mean less capital mobility (but that would also mean less community disruption). Thoughtful and compassionate liberals of all sorts, if they can be led to see clearly what exactly is being argued about here (which is not easily done), are rightly bemused or even infuriated by this idea: I mean, if you can tame the system so as to retain its advantages and generate enough surplus to pay for social programs that ameliorate its structural harms, why on earth would you want to do something that actually burdens the system itself? From Keynes to Krugman (though, to be fair, Krugman was once more willing to give a financial transaction tax some consideration) all these smart folk just look at the socialists, populists, and localists, confused and weirded out by such proposals. And since the language of sustainability and labor and community and other collective moral goods has mostly been in the ash heap for the past century, responding in any way which is actually comprehensible isn’t very easy.
That lack of comprehension is a function of our times, of course. A century ago, the moral and communitarian–that is, the conservative (or as I prefer to call it, the “left conservative“–case against socially disruptive, collectively disempowering, but admittedly damn productive capitalist growth was pretty obvious, though by no means broadly accepted. William Jennings Bryan, the most nationally prominent spokesperson for this kind of more democratic, less banker and investor-friendly, more producer-oriented (and thus, inevitably, more localist and agrarian than urban and industrialist) vision of market economics, ran for the presidency–and lost–three times. The parallels between Bryan and Sanders are interesting, to say the least–among others, you can see in the complicated squabbles over whether Sanders counts as a “real” socialist the same sort of disputes over whether Bryan, in accepting the Democratic party’s nomination in 1896, was selling out the Populist cause. And, of course, there’s the argument that if Sanders actually manages the ridiculously unlikely feat of snatching the nomination away from Clinton, that he’d both be soundly defeated and will have forced class-conscious real changes into the Democratic party, as Bryan’s nomination in 1896 (and 1900, and 1908), helped make it possible for progressives like Woodrow Wilson and Franklin Delano Roosevelt to win the party’s support later on. But mostly, I think, those similarities are overshadowed by a major difference: Bryan, and all sorts of other populists and socialists (and even some actual traditionalists) a century ago, could recognize that certain types of, and certain amounts of, capitalist growth were just socially bad, however many individuals such transactions may financially reward. Bad because they create inequality and division; bad because they encourage radical individualism and cultural fragmentation; bad because, well, to be frank, the whole Christian tradition has mostly opposed them. And while Sanders has shown himself more than capable of quoting scripture and popes when it suits him, he lacks the civil religion substance that could give the form of his anti-capitalist democratic socialism some real, populist, moral weight.
None of which is relevant to the author of the article in question, because there’s no indication that he’s cognizant of these questions of morality, community, and sustainability either. And let’s give Sanders some credit: if you actually believe (as I do) that our market economy ought to be informed by, and even regulated by, greater collective concerns and democratic controls and moral limits than contemporary capitalism tolerates, than Sanders anti-Wall Street talk at least partakes of the shape of the reforms we need. And at the level of the presidency–or, more realistically, at the level of the kind of highly symbolic exchanges over political possibilities which a presidential nomination contest makes possible–being able to get clear on just what the (admittedly somewhat discomforting) point and the shape of one’s differing economic visions are is no small blessing at all.
Your 6th paragraph (starting with “What would it mean for the Wall Street system (or, again, mainly the one which has emerged over the past generation or so) itself to see less activity?”) is deeply confused. You speak of government interactions, regulations, control, etc., of “the system” but seem to be either unaware of, or if you are aware you completely ignore, the fact that “the system” as it exists is completely intertwined with and dependent on government intervention. The reason why Wall Street behaved as it did in the runup to the 2008 crisis was that they “knew” that the government was 100% going to bail them out should they get in trouble. And other than a tiny window after Lehman collapsed and it seemed that that might not be true, they were 100% right.
If you want to see some semblance of return to sane, moral activity on Wall Street, it needs to made 100% clear that they are entirely on their own, that we the people will not step in should their reckless and stupid bets blow up in their faces. Wall Street is not the economy, and the government should not humor its insane self-conception that it is.
Quick question–which party is it that has installed the revolving door between the penthouse suites of Goldman Sachs and the position of Secretary of the Treasury? Hmm.
As has been pointed out in this space before, all of current politics tracks exactly what Chesterton and Belloc foresaw a century ago. Modern powerful capitalists incestuously interact with socialism and each economic failure invariably leads to calls for more and more socialism, as if the only problem is that the government (“simply the name we give to the things we choose to do together” in the infamous phrasing) doesn’t have enough control over everything.
The notion that the answers to all our problems is that the government should have more control, and should encourage/allow the consolidation of the economy into a small number of massive corporations, and that the individual will be protected by belonging to a massive union that will mediate with those massive employers, is risible, if not diabolical.
Always good to hear from you, Brian! (I wish the comment function here at FPR didn’t squish everything together into a single paragraph; it makes my responses look like run-on paragraphs. Oh well…)
You speak of government interactions, regulations, control, etc., of “the system” but seem to be either unaware of, or if you are aware you completely ignore, the fact that “the system” as it exists is completely intertwined with and dependent on government intervention.
As I go back over my article, the only “government interactions, regulations, control, etc.” that I speak of in particular is the idea which Sanders and others have floated of a financial transaction tax, though I did speak in general in the final paragraph about “greater collective concerns and democratic controls and moral limits than contemporary capitalism tolerates.” The thrust of my post is obviously not policy, but political and economic theory: what is it that prevents those who recognize the harms of Wall Street excesses from realizing that it is the activity, and not simply the excesses of the activity, which causes it? Answering that question doesn’t oblige me to get into the details Sanders’s plans, such as they are, but rather to point out the logical corollaries of the response which his proposals at least gesture towards, whether he realizes it or not. As for the federal government’s involvement in Wall Street’s evolution, you get no argument from me; big government has been at least as essential player in enabling these kinds of ridiculous transactions as global technology and good old human greed has.
If you want to see some semblance of return to sane, moral activity on Wall Street, it needs to made 100% clear that they are entirely on their own, that we the people will not step in should their reckless and stupid bets blow up in their faces.
Again, I agree (as, incidentally, did Senator Sanders, who voted against the bailout of the banks back in 2008: http://www.sanders.senate.gov/newsroom/press-releases/2008/10/01/wall-street-bailout).
Quick question–which party is it that has installed the revolving door between the penthouse suites of Goldman Sachs and the position of Secretary of the Treasury? Hmm.
Well, I actually seem to recall Michael Deaver making out like a bandit during the Reagan administration, but I’m sure the answer you’re looking for is “the Democrats!,” and I’ve no problem admitting it. Your point?
Modern powerful capitalists incestuously interact with socialism and each economic failure invariably leads to calls for more and more socialism, as if the only problem is that the government (“simply the name we give to the things we choose to do together” in the infamous phrasing) doesn’t have enough control over everything.
You have an interestingly limited operative definition of “socialism” here; as best I can tell from what is implied in this sentence, it means “agents of the state who employ government regulation to further the financial interests of corporate clients.” That’s not a definition which I think even Chesterton or Belloc would go along with; they assumed (wrongly, but at least consistently) that socialism = totalitarian government, which would suggest its own reverse as well (the absence of totalitarian government = the absence of socialism). You might want to consider the wide range of arguments over democratic socialism which partake of 19th-century populism, Catholic distributism, and other communalistic arrangements. But, if you’re convinced that the Bellocian diagnosis of modernity has been fulfilled in every particular, then I wish you well in avoiding the Gestapo for commenting on what surely must be a banned website.
Well, we are 100% in agreement that the commenting situation here is a true disaster. Surely it can’t be that hard to fix. It makes it rather difficult to correspond back and forth on multiple topics.
1) I concede that you weren’t specific about what you meant by “government interactions, regulations, control, etc.”, but surely you were alluding to such activities in your comment that “if you can tame the system so as to retain its advantages and generate enough surplus to pay for social programs that ameliorate its structural harms”, no? And my point as always is that the government needs to STEP BACK to “tame the system”, since the current system is entirely a creation of government perversion of the market (entirely welcomed by those in the system, of course, since they benefit handsomely from the government actions). The system as it exists is entirely dependent on direct government intervention.
2) Good for Senator Sanders for voting against TARP. He is one of a very small minority of Democrats to have done so. His prescriptions are still absurd, of course.
3) I use socialism in the way that the average person does, i.e. “We are all socialists now” as Newsweek or whoever said in 2008 (of course, at the same time we are supposed to believe it is obscene and outrageous to call anyone in America a socialist–it’s so hard to keep up), meaning more or less advocating for substantially more direct government control over more and more aspects of the economy than has ever been the norm in American history. Maybe that’s fairly meaningless, but I think it’s clear from my posts that that’s the basic idea. Going into too much more detail quickly devolves into uninteresting semantics like what’s the difference between Trotsky and Stalin or whoever. Yawn.
4) As I said before, socialists basically want the government to control more and more, and “capitalists” (why aren’t we arguing over that word the same way?) are perfectly happy with that, as they both want to reduce competition, uncertainty, etc. So, no, I don’t think your paraphrasing is right, as the socialists don’t want to enrich “corporate clients”, though of course the system invariably attracts those who are purely motivated by cronyism and crude material considerations.
5) I don’t understand your closing remark–is there some secret Bellocian society with a list of banned websites on it? I would love to see such a list, it would be very helpful–but to me The Servile State, The Utopia of Usurers, etc., seem awfully close to perfect in their assessment of economic events of our time, far better than anything I’m aware of from Marx, for instance, who was a terrible prognosticator. Your mileage may vary, of course.
6) To me, “the left” of the last century or more is at least as culpable in the destruction of community organizations of all sorts as is “the right” and arguing that labor unions or the government are going to be a major bulwark in some sort of rebuilding process is absurd, and gives away the game by positing that employment and economics are the primary drivers of society. But then, I’m not a Marxist, in any sense of the word.
Brian,
Well, we are 100% in agreement that the commenting situation here is a true disaster.
Always a pleasure to find myself in agree with a smart interlocutor!
1) I concede that you weren’t specific about what you meant by “government interactions, regulations, control, etc.”, but surely you were alluding to such activities in your comment that “if you can tame the system so as to retain its advantages and generate enough surplus to pay for social programs that ameliorate its structural harms”, no?
That misunderstanding was my fault, I suppose. My writing wasn’t clear enough, with my attempting to capture what classical and contemporary liberal economists and others don’t understand about someone like Sanders is trying (and usually failing) to say. The passage you quote above is one that I attribute to “thoughtful and compassionate liberals of all sorts”–you know, all those good Rawlsians and Clintonians who want finance capitalism to generate extreme wealth, because that becomes a source of redistributive taxation. Sanders is hardly free of that mindset, obviously, nor do I necessarily wish him to entirely be; I personally don’t think slamming our debt-ridden-and-dependent socio-economic order directly into distributism or socialism would be a very Christian or responsible thing to do, even assuming it was politically possible (which it isn’t).
3) I use socialism in the way that the average person does, i.e. “We are all socialists now” as Newsweek or whoever said in 2008 (of course, at the same time we are supposed to believe it is obscene and outrageous to call anyone in America a socialist–it’s so hard to keep up), meaning more or less advocating for substantially more direct government control over more and more aspects of the economy than has ever been the norm in American history.
Is Bernie Sanders (or was William Jennings Bryan, or am I) calling for more direct government control that existed during World War II, when the federal government instituted rationing and price controls? Or during the early days of the Cold War, when the highest effective rates of taxation reached 90%? I’m sorry, I realize that within certain circles of public opinion “socialism” has a supposedly clear reference to some unAmerican level of government interference in the free market, but as boring as the historical argument may be, I simply have to insist that, unless you’re comfortable calling Roosevelt, Truman, and Eisenhower all “socialists” (and maybe you are, though the people who called themselves socialists at the time would have vociferously disagreed with you), then your use of the term, however conventional it’s use, is simply lacking.
5) I don’t understand your closing remark–is there some secret Bellocian society with a list of banned websites on it? I would love to see such a list, it would be very helpful–but to me The Servile State, The Utopia of Usurers, etc., seem awfully close to perfect in their assessment of economic events of our time, far better than anything I’m aware of from Marx, for instance, who was a terrible prognosticator.
That was me being too clever again. Chesterton, of course, in his An Outline of Sanity, said that socialism was, simply, a condition of totalitarian control: “Socialism is a system which makes the corporate unity of society responsible for all its economic processes, or all those affecting life and essential living. If anything important is sold, the Government has sold it; if anything important is given, the Government has given it; if anything important is even tolerated, the Government is responsible for tolerating it. This is the very reverse of anarchy; it is an extreme enthusiasm for authority.” If we take this seriously, then the only socialist states that actually deserve the name were the great 20th-century tyrannies of the USSR, China under Mao, some of the Warsaw Bloc states, etc.; the above definition obviously cannot apply to Sweden (home of Volvo!), or Finland (home of Nokia!), or the USA. I was attempting a snark by which an insistence upon the guidance of Chesterton & Co. to defining socialism, plus an insistence that Wall Street’s and the Federal Reserve’s mutual corruptions must equal “socialism,” would mean that we must, therefore, be living today in a totalitarian state, within which Front Porch Republic would surely be a banned. Sorry; I was stretching too far for the sake of a cheap joke.
I’m not sure that “Hey, our program doesn’t institute nearly as much government controls as were put in place during WWII” is all that convincing of a position, but if you want to go with that, have fun, I guess. I have no idea how we’re supposed to know when we’ve “won” against whatever “enemy” we’ll be fighting, and when we can transition back to “peacetime” conditions.
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