Doth We Protest Too Little?

After interning for Morse in ’68, I served as a Philadelphia parade marshal for the half-million protesters who descended on Washington for the Peace Moratorium in 1969. The chairman of the Joint Chiefs of Staff characterized us as, “interminably vocal youngsters, strangers alike to soap and reason.”

On the very day alt-press publisher, Jed Morey, was covering “Occupy Wall Street” insurgents in lower Manhattan, I was taking a meet at a major bank nearby.  While an early morning text from Jed alerted me to the “Anonymous” event, the bank folks were alerting me to potential traffic jams engendered by the 66th convening of the UN General Assembly.  The NYPD so effectively contained and marginalized the protests that I had to wait on YouTube coverage to check it out.  Just as well.  Reminding the “99%” that they’re being had by the privileged 1% is a sharp message, but the rag-tag brigade from Liberty Square crying for attention aren’t the most effective messengers. (At Right – Mark Rudd, leading the takeover of Hamilton Hall at Columbia University in 1968)

My forbearers have long challenged authority and questioned conventional wisdom.  Back in 1954, with impending defeat of the French at the hands of the Viet Minh, my grandfather, an intelligence analyst with the U.S. Army, wrote, “It seems highly doubtful whether U.S. intervention would ever be able to hold Indochina.”  As he was born in western Sumatra, he had a better handle on Southeast Asia than most Americans and passed that understanding along to his off-spring. 

So it was in 1965, at age fifteen, I found myself at my first Vietnam rally in the old Madison Square Garden.  Among the keynoters, were famed baby doctor Benjamin Spock, Coretta Scott King and Senator Wayne Morse of Oregon, one of only two members of Congress to vote against the Gulf of Tonkin Resolution which Lyndon Johnson used as a blank check to escalate the conflict.  Bayard Rustin, who had organized the landmark Civil Rights march on Washington in ’63, challenged the Garden crowd of 18,000: “We must stop meeting indoors and go out into the streets.” 

A few thousand of us took up the challenge and started wending our way from 50th & 8th down through the Theatre District and over to the UN.  Filing across seedy 42nd Street in the dark of night, big, beefy red-neck types yelled, “Commies, love it or leave it!”  My 5’3” mother was accompanying me and, with a mouth that made truckers blush, dished dirtier than she got, scaring the be-Jesus out me and the red-necks too, it seemed.  It hardened me for events to come. 

After interning for Morse in ’68, I served as a Philadelphia parade marshal for the half-million protesters who descended on Washington for the Peace Moratorium in 1969.  The chairman of the Joint Chiefs of Staff characterized us as, “interminably vocal youngsters, strangers alike to soap and reason.”  Participants were definitely hairier than earlier peaceniks, but the DC police remained chilled, in stark contrast to the Chicago police riot at the Democratic convention the year before.

The following year I moved from protest to an “environmental teach-in,” helping to organize the first Earth Week.  We drew support from across the board with some sixty corporate sponsors such as GE, Rohm&Hass, Scott Paper and Bell Tel.  At the feel-good culmination in Phillie’s Fairmont Park, Senator Ed Muskie, sponsor of the landmark Clean Air Act of 1970 delivered the keynote and the cast of “Hair” sang “Hello Carbon Monoxide.”  By the end of the year, Richard Nixon, perhaps as a tactical diversion from other deeds, created the Environmental Protection Agency.

Right now, if you go around the country,” Tom Steyer said upon receiving the 2011 Rage for Justice Award, “the fight is about the right of the Environmental Protection Agency to protect the environment.”  Rage for Justice Award is not brought to us by the Day of Rage folks who Occupied Wall Street but from Consumer Watchdog who “expose rip-offs and injustice.”  And Tom Steyer is not your usual activist, but a billionaire hedge fund manager.  He received the award in recognition of facing down the gas-producing Koch brothers and their Texas oil brethren who attempted, in 2010, with Proposition 23, to overturn AB 32 that has turned California into the beacon of the clean energy economy.

“They we’re in a situation where they [Koch bros] were going to make a bet about protecting their bottom line,” Steyer said.  “So it was always a risk/reward bet the way businesses work.  So if they started to get behind that meant that the risks were higher and the reward less likely to pursue the fight.  So that, in a funny way, it’s like being in a fight with a bully.  You know that if you can ever get him scared, he’ll quit.

 “We view the environmental fight as something where the message is really important and the messenger is really important.  We believe that if people are going to understand it, they are not only going to have to hear something true, they’re going to have hear it from someone they trust.”

In the battle against Prop 23, Steyer was aligned with former Marine captain George Schultz who held four cabinet posts under Nixon and Reagan.  In the posturing over tax misrepresentation, Obama finally invoked Warren Buffet’s year-old call to tax the very rich.  While guerilla street theater can be tippingly pointed, establishment messengers of principle will likely gain far more traction in today’s America.  Which is why this 60s organizer found himself at a big bank during the Occupation of Wall Street looking for ways to make energy efficiency pencil out.

Capitalism and Regulation Are Not Mutually Exclusive

Deregulation became the mantra of free market capitalists who view all government intervention into the markets as a complete affront to our democratic principles, as though the two are somehow connected. It sounded sexy and even seemed to be working for a while until our speculative chickens came home to roost and laid rotten eggs in all of our coops.

John Boehner NY Economic Club
House Speaker John Boehner speaking in New York

Osama bin Laden’s body has barely come to rest on the ocean floor and the Republicans are back in attack mode against the Obama administration. Speaker of the House John Boehner is taking his spending-cut crusade on parade again in the run-up to the vote to raise the nation’s debt ceiling. In doing so the Ohio Republican is not only acquiescing to the clamorous Tea Party faction of the GOP but to the special interests that define their politics.

The debt ceiling debate is the ultimate diversion from the more genuine debate that should be taking place in Congress. This is not to say it is without merit. But like so many political disputes, our politicians are intent on examining the symptoms of a crisis instead of deconstructing the root causes. The fact is our enormous national debt is a result of fighting two costly, protracted wars abroad and bailing out hooligans on Wall Street who engineered the greatest heist in American history. The problem is the GOP wants to fix everything else they deem to be wrong with the system without addressing these two key components of our indebtedness. 

Boehner and company are continuing the charade begun when Ronald Reagan was king and Alan Greenspan was God. Deregulation became the mantra of free market capitalists who view all government intervention into the markets as a complete affront to our democratic principles, as though the two are somehow connected. It sounded sexy and even seemed to be working for a while until our speculative chickens came home to roost and laid rotten eggs in all of our coops.

In a speech earlier this week to the Economic Club of New York, Boehner returned to the key conservative talking points, excoriating Washington for pandering to banks that are too big to fail without addressing the deregulatory fever in the Beltway that created this situation. He criticizes instead the government’s bailout response, saying that our “debt mostly borrowed from foreign investors caused a further erosion in the economic confidence of America and increased uncertainty for millions of private sector job creators.” If you asked these so-called job creators why they aren’t adding more people to the payroll or taking on more capital projects, I highly doubt the resounding answer would be America’s debt. Under President Reagan our debt skyrocketed but these same job creators doubled-down and invested in America, making the logical question: Why not now? Boehner went on to claim that the “massive borrowing and spending by the Treasury Department crowded out private investment by American business of all sizes.” That’s funny. I could have sworn that by keeping interest rates at practically zero, business owners would have been encouraged to borrow and invest in their companies with alacrity. 

This is where the GOP message gets into funky territory. You would be hard-pressed to find an economist who would deny that pumping bailout funds through the financial sector prevented a total collapse of our economic system. Everyone won in the short run. But because Congress was too cowardly to fix the structural regulatory issues in the banking industry, the big winner overall was Wall Street. The bailout allowed the banks to partake in riskless arbitrage (borrowing money at no cost and investing it in guaranteed government bonds for example) and bypass the private sector and individuals in desperate need of lending support. It’s one of the primary reasons the Dow Jones Industrial Average continues to rise despite a still-flagging economy; the dollars are flowing at the top with very little pulsing through the rest of the economy. But the concept of arbitrage is largely lost on Americans and our politicians are reluctant to talk about it in a meaningful way, instead choosing to focus on the national debt.

What’s worse is that the banks have presumably used a good portion of this money to invest in opaque investments that have artificially created crises in the agriculture and energy sectors. I say “presumably” because no one can really be sure where some of this money is being invested because the regulatory environment is still so broken and corrupt that the funds are impossible to track directly. It’s the pricing and behavior of these markets that gives them away. Energy supply is at an all-time high, demand is still perilously low yet the markets are soaring because unknown companies are pouring billions of dollars through small commodities exchanges and wildly impacting the prices of these investments. This phenomenon translates directly into high gasoline prices and rising food costs, thereby suppressing the recovery and obliterating household savings. Here again Boehner changes the subject, suggesting that the Obama administration is somehow keeping “energy resources under lock and key.” Further, he accuses Democrats in Congress of “creating more uncertainty for those who create American jobs” by raising “the specter of higher taxes.” Another direct attempt to divert the conversation from reality. After all, didn’t we just extend the Bush-era tax cuts? And weren’t these the same tax cuts that were in place prior to and during the economic meltdown?

This year Forbes added 214 new billionaires to its list of the world’s richest people. That’s up from 97 new billionaires last year. In perusing the list of the richest Americans, it’s interesting to note where the wealth of those whom Boehner touts as “job creators” is derived. Hedge funds, investing, oil, pipelines, retail, chemicals and pharmaceuticals are the industries that dominate the roster. Most of these companies employ relatively few people compared to the billionaire industrialists of old. No infrastructure companies, few manufacturing companies, and a handful of high-tech companies appear on this list. And of the ones that do appear, most of them manufacture overseas. I guess in Boehner’s world a job created in Bangalore is equal to one created in Scranton. What many of these industries do have in common is that they represent the vast majority of campaign contributors to people like John Boehner.

So it begs the question: Who is Boehner trying to protect? In his New York address he repeatedly refers to the “arrogance of Washington” even though that’s where he’s been working since 1990. Arrogance is not trying to pay for past transgressions by taxing those who devastated the economy. Arrogance is cutting the government’s primary funding source via an extension of the Bush-era tax cuts and attacking entitlement programs instead of the regulatory issues that brought down America’s entire economic system.

Where the White House fails is by indulging in debates over the debt ceiling and releasing oil reserves while bickering over entitlements. Our economy cannot, will not, improve until our elected officials have the courage to restore sanity to the marketplace by re-implementing the regulations that properly governed debt, equity and commodities trading for decades.

In recent testimony to the Congressional Oversight Panel on the impact of the TARP, Columbia University professor and former Clinton advisor and chief economist of the World Bank Joseph Stiglitz argued that “we have not repaired our banking system, and indeed, with the enhanced moral hazard and concentration in the financial sector, the economy remains very much at risk.”

Joseph Stiglitz

These arguments are nothing new to the Nobel Prize-winning economist, who in 2008 warned of the enduring negative consequences of deregulation. At a hearing held back then by the House Committee on Financial Services, Stiglitz invoked Adam Smith, saying that “even he recognized that unregulated markets will try to restrict competition, and without strong competition markets will not be efficient.” One of Stiglitz’s solutions to this is to restore transparency to investments and the markets themselves by restricting “banks’ dealing with criminals, unregulated and non-transparent hedge funds, and off-shore banks that do not conform to regulatory and accounting standard of our highly regulation financial entities.” For emphasis, he notes that “we have shown that we can do this when we want, when terrorism is the issue.”

He’s right in every aspect. This is economic terrorism that Americans are unwittingly enabling by allowing politicians in Washington to skirt the issue of financial reform and to skip tighter regulations in favor of continuing tax breaks, cutting spending on infrastructure and demonizing programs that provide security for the sick, the aged and the unemployed.

Yet no matter how often people of Stiglitz’s ilk provide testimony, no one on these committees either understands or cares what is being offered. I suppose that just because we call them “hearings” doesn’t mean anyone is necessarily listening.