Following the Wall Street Crash and the Great Depression banking regulations were tightened up. For forty years banking and finance became synonymous with boring effectiveness. The seventies changed all that. The oil price rise allied to several crop failures made people lose faith in their governments effectiveness. Along comes Reagan spouting, “Untruths and doublethink to convince a credulous public that ‘government had become the principal obstacle to their personal fulfillment.’’ Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present by Jeff Madrick reviewed in New York Review of Books by Paul Krugman and Robin Wells, which appeared in the Guardian 25/6/2011.
Reagan, who made a great play on his aw shucks folksiness, helped make greed not only acceptable but desirable. Deregulation of the financial sector promoted the boom and bust cycle which has dominated world finance ever since. As each bust passes we hear the familiar mantras of ‘lessons must be learned’ without any real attempt to put the genie back in the box. Why is this?
It has a lot to do with the way our politics is financed by the greedy. People like Friedman and Greenspan who believed the financial markets could do no wrong are very influential. There is another aspect which is disturbing as it is with us to this day. “It’s hard to make sense of the growing ability of bankers to get the rules rewritten in their favour without talking about the role of money in politics.” (ibid)
In America today most Republicans are attached to greedism and see big government as the problem. They extol the small man but are in thrall to corporate executives. The lack of regulation which they support and which allowed the sub-prime market to boom and then bust, are working hard to undermine the Obama administration’s efforts to put in place consumer protections which would prevent another sub-prime fiasco.
In the UK much has been made of ‘we are all in this together’ and the need for massive and swingeing public sector cuts. Little has been done to rein in the architects of our distress, the banks and financial institutions who brought about this mess. It is no co-incidence that the biggest contributors to Tory funds are financial institutions and hedge funds.
As ‘The Age of Greed’ makes clear, Wall Street has triumphed at the expense of America. We are in a similar position. The City continues on its unrestricted and unrestrained way while the rest of us take the pain for very little gain. This is a global problem.
There has to be a way for the insatiably greedy to be controlled for the good of the world. Our current crop of politicians are simply not up to the task. Too many are corrupt; some are weak and others lack the principles and values to formulate an alternative vision.
We cannot go on like this.