Wall Street Grabs Mad

Why no one is calling the Paulson/Bernanke plan to bail out Wall Street a massive power grab by these two men is beyond me, but historians may see it for what it is. They gain power by dealing directly with those holding our nation’s economy hostage, the Wall Street elite we have allowed to take control, instead of giving this power to our elected representatives. This is appeasement of the investor class on a scale not seen since the days of the danegeld. That Congress is fighting back is a good thing in theory, but may be ruinous in practice: we are all subject to the fragile psychology of the investment class and its representatives on the trading floor.

Our nation is prepared to spend nearly a trillion dollars in order, not to shore up the actual balance of credits and debits of our financial system, but to cure the “jitters” of those whose hands are on the money. Almost everyone in Congress agrees this is “necessary.” What this shows us is that bank executives, traders, investors, are “super citizens,” capable of wielding immense power simply by acting on their disordered states of mind. Maybe more accurately, they’re the real citizens of this country, the genuine aristocracy that must be appeased so the king’s men, Paulson and Bernanke, can keep their heads on their shoulders.

I say that it’s not about actual balances between debits and credits, but what would be even more accurate is to say that the balances of debits and credits that are being weeped over are not actual in the common sense of the word; they are a fiction every bit as real, and every bit as revealing, as a character in some broad national drama, mythological numbers whose significance looms as real as Gilgamesh in the mind of a Babylonian. What we have is a crisis of values in both senses: the values of things and how we value things. The value of an object is what those negotiating over it, or potentially negotiating over it, agree that it is. This is true whether or not it’s a stock in a company or a home on the range. Thus when home values are “artificially” inflated and then that value collapses, the event is more a story we tell about ourselves to ourselves than it is anything inherent about the home. The home does not change; our attitude about it does. When that attitude is held by the investment class, we all lose money, since the investors are the ones whose actions infuse money with their magic, fictive power.

None of these observations are particularly new, but stating them broadly would no doubt cause our system to collapse, again, for the very reasons stated above. All cultures need these stories about themselves to define themselves, and without them we turn to the Ghost Shirt Dance and the Boxer rebellion. Cultures survive such identity crises, but rarely without war, chaos, and starvation that are very, very real—a process we still see playing out in post-colonial Africa.

Another illusion muddying the picture and causing the media and even those involved in solving the problem from seeing it clearly is revealed by the fact that nobody called the president on his statement that we practice a system of “democratic capitalism” in his recent speech about our financial crisis. I generally don’t nitpick about such things, but we practice democracy in only very limited ways: we’re a republic, for the most part, in which people choose their representatives. The idea was that this setup avoided the messiness of mob rule that true democracy was prone to, gave legislators time to travel to the capital and stay there during sessions, and allowed the lay citizen to elect someone perhaps more able to do the job of ruling than himself. The representative was meant to be aligned with the interests of the citizen who elected him, and the competing interests of the various representatives in congress were meant to lead to deliberations, negotiations, compromise—in other words, reasonable solutions. That our Congress is rarely able to actually reach those things says more about our failure as an electorate to do the job of an informed citizen than it says about the relative incompetence of the men and women there. But because elections cost a lot to run, those able to afford to hold office are frequently of or aligned with the investor class, and so they see why bills like the Bernanke/Paulson bill must pass, but they also know that the bill is highly unpopular with the wage-slaves back home. An actual compromise must be reached or the peasants—like you and me—may revolt.

Part of the problem we have seeing this clearly is that we also practice capitalism, a system that is in many ways fundamentally opposed to democracy: where democracy thrives on equality and an informed and interested public, capitalism thrives on the inequality of investors and those they invest with and an ignorant and docile consumer. We get confused because capitalism and democracy share a features: both require a certain amount of liberty to succeed. The investor must be free to invest as she sees fit, and the citizen must be free in body and mind in order to make civic decisions without interference. Capitalism must keep information from competitors in order not to reveal its trade secrets and from consumers in order not to reveal that it serves the bottom line and not them. This is part of the reason that free-market theorists’ “rational agent” notions are total crap—or rather a cynical ploy: basic business practices preclude the transparency the consumer needs to act in a rational way when making buying decisions. The pushers of subprime loans in this latest meltdown provide millions of cases-in-point since they basically ran a confidence game on the poor, creditless fools they duped into buying their variable-rate loans. Added to this is the fact that consumers rarely act rationally when making purchasing decisions anyhow; because most products are equally bad due to the excesses of corporate corner-cutting; consumers buy instead based on what they feel about a product or what they think the product says about them. More basically, industrialization thrives on overproduction, and so capitalism has created consumers, a class of people who define themselves by what they buy and the need to collect more of it, needed or not. Thus the president–with a straight face and perhaps genuinely believing it—told us to go out and buy things as our patriotic duty after 9-11-2001. The investment class was already firmly in control.

As legislators and presidents ceded more and more power to the investment class over the past 25 years capitalism was kept healthy but at the detriment of the real-world values (in both senses) of the citizen; the market became more opaque as it became more free, and its concerns became, de faco, the most important concerns the nation has. It has gotten to the point now that, when asked to define “freedom,” or “democracy,” nine out of ten of my students will equate it with consumer choice, the ability to go to Wal-Mart in the middle of the night and choose between fifty different Chinese-built clock radios.

Democracies, certainly, can tolerate a certain amount of capitalism, but capitalism must be seen for what it is: a way of doing certain economic functions, not a way to run a country.