The End of
Wall Street ideologues have been gambling our money and
screwing us all. Now is a chance to correct their excesses
By Ian Williams
Guardian' -- - As the all-too-often
Adam Smith actually said: "All for ourselves, and
nothing for other people, seems, in every age of the world,
to have been the vile maxim of the masters of mankind."
No one can say that current
events are a one-off. The get-government-out-of-business
brigade, the masters of the universe, have in their three
decades of unbridled power produced the
savings and loan bail-out, the
Mexican bond bail-out, the
Asian currency crisis, the
Enron and other related scandals, the tech bubble, the
Long-Term Capital Management collapse and rescue, a wage
freeze for working Americans and now this.
And the irony is that these
vile people who are now graciously agreeing to pocket a
trillion dollars of taxpayers' cash have been arguing for
three decades that government has no business in business,
least of all in pension provision. In their famous phrase,
it would pose a
"moral hazard" for ordinary Americans to think that
their government would look after them if in old age their
income or their health failed them.
Those who have engineered
these serial disasters, which have inflicted more damage on
the US and world economy than Osama bin Laden and al-Qaida,
have not been pursued into the hills of Bora Bora.
Governments have reduced their taxes as they reward
themselves with more and more salary, bonuses and stock
options. If the shares of the company they manage take a
dive, they backdate their options. If the company fails,
they take a golden parachute. And when all else fails, they
come to the taxpayers, top hat in hand.
There is one small
consolation. What if these guys had achieved their desire,
shared with John McCain and George Bush, to
privatise the social security system? Just think of the
social and economic disaster they could have wrought given
all those trillions of dollars to play with.
With the sudden affection
for government ownership and assistance now globalising its
way consensually from Washington, will we see a new,
social-democratic age of government involvement in industry?
Probably not soon. But as Churchill said, this surely
deserves to be beginning of the end of the Washington
neoliberal consensus that George Bush's father called
voodoo economics. Bill Clinton, Tony Blair and even
Gordon Brown all succumbed to that old black magic – and
looking at Barack Obama's economic advisers, there is a more
than even chance that he, too, is under its spell.
Clinton introduced tough
love for working people, with welfare reform and lifetime
caps, since it was clear that if you had no job it was your
fault, not that of the titans of industry who had offshored
your job or preferred to play the tables with
sliced-and-diced derivatives of derivatives rather than use
the capital for industrial and infrastructural investment.
Clinton famously quibbled
about what "is" meant. It is much more productive to
consider what the "market" is, not least when it falls from
McCain's lips. As the negative example of Soviet-style
economy suggests, it is difficult to beat the market when
you are talking about the free exercise of consumer choices
for goods and services and the consequent allocation of
capital for providing them. But in the US, no one blinks
when governments ban or regulate sales of tobacco, alcohol
or drugs, let alone gambling or sexual services.
The financial markets, with
increasing deregulation, have become a heady combination of
sex and gambling. The Wall Street ideologues have been
gambling our money and screwing us all, as investors,
pensioners, workers and taxpayers.
There has been some
understandable chortling as the British and American
governments override their free-trade platitudes to
nationalise companies, whether Northern Rock or AIG, Fannie
Mae or Freddy Mac. But the plan Goldman Sach's alumnus Hank
Paulson is proposing now is not nationalisation. It is a
strings-free handout to his former colleagues on Wall
However, there are
opportunities in this crisis. Don't just take over the
lemons left squeezed to the pips. Take equity shares in the
whole companies. Maybe the proceeds could go to a sovereign
wealth fund, to invest in manufacturing and infrastructure.
Above all, if the high
priests of finance invoke government assistance, then now is
the time to finish the job that Roosevelt started, Truman
propounded and even Nixon considered: a universal
single-payer healthcare system in the US. If AIG, one of the
world's biggest insurers, is effectively now nationalised by
the US government without debate, then who can argue?
Nationalise the health insurance companies.
At the very least, now is
the time to set up a comprehensive and effective regulatory
system, and to ensure that if the taxpayers pick up the tab
for executive excesses, the executives pick up more of the
tab for taxes. Over to you Obama – and for that matter,
Gordon Brown. Are you with the vile or the victims?