Corporations and banks reached out for control over government

[Cees Binkhorst]

REPLY TO: D66 at nic.surfnet.nl

Kennelijk een herhaling van zetten?
Of een business geheugen van maximaal één generatie?
En wat is de 'individual freedom' in een markt, die door toedoen van het
congress gespeend is van concurrentie tussen b.v. fabrikanten van
geneesmiddelen en vliegtuigfabrieken in een internationale markt ?

Groet / Cees

Obama and Civic Idealism
http://www.democracyjournal.org/article.php?ID=6731
by Michael Sandel

I magine a president, or a presidential candidate, taking on Wall Street
in blunt language such as this: “We have been dreading all along the
time when the combined power of high finance would be greater than the
power of the government. Have we come to a time when the president of
the United States or any man who wishes to be the president must doff
his cap in the presence of this high finance, and say, ‘You are our
inevitable master, but we will see how we can make the best of it’?”

Or this: “The supreme political task of our day is to drive the special
interests out of our public life.”

Or this: “Through new uses of corporations, banks, and securities,” a
privileged economic elite has “reached out for control over government
itself,” rendering political equality “meaningless in the face of
economic inequality. A small group [has] concentrated into their own
hands an almost complete control over other people’s property, other
people’s money, other people’s labor—other people’s lives.”

Today, mainstream commentators and editorial writers would disparage
such talk as irresponsible populist rhetoric. But American political
leaders have not always been as deferential toward economic power as
they are expected to be today. The statements quoted above were not made
by far-out radicals, but by Woodrow Wilson (1912), Theodore Roosevelt
(1910), and Franklin D. Roosevelt (1936).

It is striking to notice the difference between their liberalism and
ours. For these icons of twentieth-century liberalism, the first
question of politics was how to subject economic power to democratic
control. When Louis D. Brandeis spoke of “the curse of bigness,” he
meant that monopolies and big banks posed a danger to democracy. Today,
we still worry about bigness, but not in the same way. When we say that
Citigroup, Bank of America, Goldman Sachs, and AIG are “too big to
fail,” we mean that their failure would wreak havoc with the economy, so
the government must bail them out rather than let them go down. The
problem with having banks that are too big to fail is that it violates
the rules of the capitalist game. When times are good, they make
outsized profits, but when things go badly, the taxpayer has to pick up
the tab.

But Brandeis had a different worry. For him, the “curse of bigness” was
not about systemic risk in financial markets; it was about democracy
itself. If corporations, trusts, and banks had too much power, he
argued, they would control the government and deprive ordinary citizens
of a meaningful voice in political affairs. This fundamental idea was
central to the liberalism of Theodore Roosevelt, Wilson, and FDR. As a
result, from the Progressive era to the New Deal, liberals debated how
best to assert democratic control over economic power.

During the second half of the twentieth century, the focus of liberalism
changed. Liberals stopped regarding bigness as a curse, and they made
their peace with concentrated economic power. The agenda of postwar
American liberalism was set out by FDR in 1944, when he called for an
“economic bill of rights.” True individual freedom required more than
the political rights enumerated in the Constitution, he argued. Under
modern conditions, it also required basic social and economic rights,
including “the right to a useful and remunerative job . . . the right of
every family to a decent home, the right to adequate medical
care . . . the right to adequate protection from the economic fears of
old age, sickness, accident, and unemployment” and “the right to a good
education.”

Unlike the anti-bigness liberalism of the progressive era and early New
Deal, the social-welfare liberalism of FDR in 1944 is recognizable as
the liberalism of our time. The great liberal causes of the 1950s, ‘60s,
and ‘70s—civil rights, Medicare and Medicaid, racial and gender
equality, federal support for education, a more generous welfare
state—were about using government to provide equal opportunity and a
social safety net, not about using government to rein in the political
influence of big banks and corporations.

Social-welfare liberalism seems a more practical doctrine than the
anti-bigness version of earlier progressives. It is hard to imagine how
to break up the large financial institutions and corporations that
dominate modern economic life. And yet I believe it’s a mistake for
contemporary liberals to give up on the old progressive project of
exerting democratic control over economic institutions. In fact, it’s a
mistake that has backfired on the Obama presidency. The initial
reluctance of Barack Obama and his economic advisers to take a tougher
line on the banks has led to a populist backlash that now threatens his
agenda.

To see how we reached this point, recall the terms of political debate
from the New Deal to the Great Society. Conservatives such as Milton
Friedman, Barry Goldwater, and Ronald Reagan opposed welfare-state
liberalism on the grounds that it led to big government and undermined
individual freedom. They identified government with coercion, and
markets with freedom. Liberals replied that market relations are not
necessarily free, since many participants in the marketplace lack the
education, skills, and resources to compete on a level playing field.
And so, for several decades, the argument went. Liberals wanted a
greater role for government, conservatives less. In this respect,
welfare-state liberalism was consistent with that of the old
progressives. But in another respect, the terms of political argument
had subtly changed. Conservative opponents of the welfare state had
become the critics of bigness, and liberals the defenders of it.
This shift changed the shape of American politics. In moments when
Americans feel disempowered, victims of forces beyond their control,
conservatives have become more adept than liberals at tapping the mood
of populist anger and frustration—even while siding with corporate and
financial interests. Consider this: Which American presidential
candidate called for “an end to giantism, for a return to the human
scale—the scale that human beings can understand and cope with . . . the
locally owned factory, the small businessman, who personally deals with
his customers and stands behind his product, the farm and consumer
cooperative, the town or neighborhood bank that invests in the
community, the union local”?

The words could have been spoken by Brandeis or Woodrow Wilson. But that
was Ronald Reagan, campaigning for president in 1976.

When Reagan took office in 1981, he declared victory over the liberal
faith: “Government is not the solution to our problem; government is the
problem.” Although Democrats recaptured the White House in 1992,
social-welfare liberalism was in retreat. Bill Clinton campaigned to
“end welfare as we know it,” and made good on the promise. But he tried
and failed to pass universal health care, and, in his 1996 State of the
Union address, conceded that “the era of big government is over.”

By the end of the twentieth century, liberalism had lost its capacity to
inspire. Having long since abandoned the old progressive project of
calling economic power to democratic account, it was unable to address
Americans’ sense of disempowerment or to arouse their civic idealism. In
the wake of the Reagan years, even the goal of creating a more generous
welfare state had stalled. At a time of market triumphalism, it was hard
to recall the point of old battles between democratic government and
high finance. Before leaving office, Clinton signed into law a
bipartisan bill deregulating the financial industry.

Which brings us to Obama. In his 2008 campaign, Obama did not offer a
new definition of liberal or progressive politics. But he did succeed in
stirring a civic idealism and hope not seen in American politics since
the short-lived campaign of Robert F. Kennedy in 1968. Obama’s capacity
to inspire was more than a measure of his rhetorical gifts. He
galvanized the electorate because he articulated a politics of moral and
civic aspiration that went beyond the policy-driven, technocratic
politics to which recent Democratic candidates had been prone.

Obama departed from the liberalism of his day in two respects. First,
liberals in recent decades have been wary of moral and spiritual
discourse in politics, seeing it as a recipe for intolerance and
coercion. But Obama rightly argued that, from the abolitionists to
Dorothy Day to Martin Luther King, reformers have long brought moral and
religious themes to bear in politics; it was folly for progressives to
desist from moral and spiritual language, and to cede to the religious
right the most potent sources of political argument. Second, thanks to
his background as a community organizer, Obama brought to his campaign a
civic sensibility that recalled an older tradition of political reform.
According to this tradition, democratic politics is not only about
policies and legislation; it’s about mobilizing citizens to claim a
meaningful voice in self-government. It requires solidarity among the
participants—in neighborhoods, congregations, unions, and other local
settings—and usually involves a struggle with entrenched economic
interests. For a time at least, the Obama campaign mobilized a movement
for change.

In his first year in office, Obama found it difficult to translate the
civic energy and idealism he inspired as a candidate into a new
progressive vision or a distinctive way of governing. Faced with the
exigencies of the financial crisis, he appointed economic advisors whose
views had more in common with Wall Street bankers and hedge fund
managers than with Brandeis, Wilson, and FDR; some had even promoted the
deregulation that led to the crisis. When bailouts and bonuses prompted
widespread public outrage, his administration treated populist anger as
a force to be placated and contained rather than as a legitimate
response to the unaccountable power amassed by the financial industry,
and the easy terms on which the government had bailed it out. To his
credit, Obama pressed ahead with the attempt to achieve universal health
care—the biggest piece of unfinished business of postwar American
liberalism. But the effort was stymied by two forces that the old,
anti-bigness progressives would have understood: first, the power of the
insurance and pharmaceutical industries; and second, populist backlash
and lingering anger over the bailout.

The Tea Party movement that rallied against Obama’s health-care reform
was about more than health care. It was a protest against big
government, the bailout, and a political system that ignores the
concerns of ordinary people. Liberals, committed to greater opportunity
for people of modest means, find it perverse that populist anger be
directed against health-care reform and big government, rather than
against Wall Street and the insurance companies. But when liberalism
gave up on the project of holding economic power to democratic account,
it opened itself up to this paradox.

In January 2010, a year after Obama took office, he was confronted with
two events that should prompt Democrats to reconnect with the populist
legacy they’ve ignored in recent decades. One was the election of Scott
Brown, a little-known Massachusetts Republican who drives a pickup
truck, to the U.S. Senate seat long held by Edward Kennedy. The other
was a 5-4 decision by the U.S. Supreme Court that struck down
long-standing restrictions on campaign contributions by corporations.

Brown’s election shows that, if Democrats fail to stand up to Wall
Street banks and powerful corporations, populist anger will take big
government, not big business, as its target. And the Supreme Court
decision shows that, unless we find another way to finance campaigns,
corporate power will loom even larger than it does now in American politics.

As news of the Republican’s surge in Massachusetts reached the White
House, Obama promised to take a tougher line on Wall Street banks,
endorsing a proposal by Paul Volcker, former chairman of the Federal
Reserve and an outside adviser, to reinstate some of the restrictions on
banks that had been enacted in the 1930s and repealed in the late 1990s.
“I welcome constructive input from folks in the financial sector,” the
president said. But so far, all he’d seen was “an army of industry
lobbyists from Wall Street descending on Capitol Hill” to block
regulatory reform. “If these folks want a fight,” he added gamely, “it’s
a fight I’m ready to have.”

The success of his presidency now depends on reviving the civic idealism
his campaign inspired and mobilizing it to bring economic power to
account. Obama has spoken of the unfinished work of America’s experiment
in self-government. The financial crisis he inherited can be an occasion
to reassert democratic control over the economic forces that govern our
lives. If Obama can rise to that challenge, he will reshape the
political landscape and redefine the meaning of liberalism in our time.

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