The 1 % responds: We all have lobbyists!

As the CBC bends over backwards to be fair and balanced they gave the top 1% the opportunity to respond to the Occupy Movement.  I will not bother with the all the detail of the rather detail-less criticism of the panellists vis-a-vis the Occupation.  What  I want to take scientific issue with is Terry Campbell’s, the head of the Canadian Bankers Association, claim that we all have lobbyists furthering our interests.  It is a widely adventurous and false claim.  We do not all have paid lobbyists working for us.  Indeed the claim is so evidently false on its face that it does not need refutation.  But let me just do the work-out.

Not only do I have extensive experience in political campaigns.  Not only did I do three degrees in Political Science. But I have from time to time moonlighted as a lobbyist.  From both practical and theoretical experience I can tell you none believe that we all have lobbyists working for us.  So what gives?

In philosophy they teach us to take the weak arguments of our opponents and give them the strongest possible formulation we can.  As near as I can tell Terry got his education in an epoch in which simple pluralist interpretations of liberal democracies were in a certain vogue.  I am thinking of David Easton here.  It is nice idea but to make long story short the pluralist theory of liberal democratic practice could not stand the intensity of day light (that is, serious empirical investigation).  No serious investigator into liberal democratic practice accepts the pluralist theory.

What is the pluralist theory?  The pluralist theory holds that society is composed of individuals (a rather trivial observation).  It also holds that in liberal democratic societies we subscribe to the formal rule of law and the formal equality between citizens (a significant improvement over feudal societies to be sure (I wonder if Terry is anti monarchist?).  This is all true, so what is the problem?

The problem is of course that substantially (in reality) we are not all equal.  We may all enjoy the equal right to vote but we do not all enjoy the same ability to influence (lobby) the government.  Terry seemingly has confused two separate issues: the right to speak and the means to make yourself heard.

Terry will go on in the interview to stress the degree to which the policy process is open and transparent in Canada.  Compared to the US I think he has point here.  But what he is recognising is that in Canada it is relatively easy for organized groups to at least get an airing with the government of the day on policy.  And this is where things get interesting.  What we know is that the major banks had been pushing for consolidation through mergers so that they could become to big to fail banks and go big into the US market and compete toe to toe with their American counterparts.  What we also know is that in the context of a domestic audience that was deeply sceptical of mergers that no minority government would do a giveme to the industry.  Mainline economists crowed about the irrationality of public policy being driven by a populist distrust of big banks; prestigious think tanks representing the interests of major Canadian capitalists like the C.D. Howe pushed for bank mergers and at the end of the day failed.  BUT they failed not because politicians were weak but because the massive lobbying campaign for mergers came to halt in 2007-2008 because it was clear that the American banking model was nothing more than a ponzi scheme for which the average American would be forced to bail out.  That is to say had the crisis occurred two years later and had the conservatives had a majority you can bet the family silver our banks would be in the same bog that American banks are.

Indeed the very prudence that the conservatives now stand tall on was forced on them by the reality of a Canadian public that would not swallow the logic of mergers between the big banks.  It is thus that Terry, in his particular role as the chief advocate (lobbyist) for the big banks can go on the national broadcaster and claim we are all equal.  The reality is of course that had it not been for the “irrational” distrust on the part of the electorate of big banks we would be in some facsimile of the big shitty south of the boarder.

But truth be told had the American banks not done such a spectacular job at the old pump and dump Canadian banks would have been, in their mega merged form, right there along for the ride.  What Terry is thus really lamenting is that in one of the rare instances where the big banks did not simply get to write the rules, Canadians were spared an opportunity to get totally fleeced like their American counterparts.

BUT all that was a product of minority governments and timing.  Had it been business as usual we would have had to endure the spectacle of Terry explaining to the Canadian public why the group he lobbies for is worthy of a tax payer bailout.

Note to readers:  The C.D. Howe has become so embarrassed at the paper they sponsored on behalf of of banking mergers that they have put it in the memory hole.  Thanks to the internet gods the document can be found here.

Chocolate Rain

On the mass cultural front I alway seem to be a dollar short and a day late. Intense, poetic, political and beautiful. In short, a working definition of revolution.

The artist, a graduate student, calls it cheezie. I would hate to know what he thinks qualifies as serious. Too bad he feels the need to give a nod to post-modern chic to keep his cool. I would call that the consequence of vanilla rain: Shhhhh…don’t mention the war–class, race and gender = revolution.  But then you would have to believe in progress.  Happy easter.

My favorite quote:

Chocolate Rain
Dirty secrets of economy
Chocolate Rain
Turns that body into GDP
Chocolate Rain
The bell curve blames the baby’s DNA
Chocolate Rain
But test scores are how much the parents make
Chocolate Rain

Chocolate Rain by Tay Zonday

Chocolate Rain
Some stay dry and others feel the pain
Chocolate Rain
A baby born will die before the sin
Chocolate Rain
The school books say it can’t be here again
Chocolate Rain
The prisons make you wonder where it went
Chocolate Rain
Build a tent and say the world is dry
Chocolate Rain
Zoom the camera out and see the lie
Chocolate Rain
Forecast to be falling yesterday
Chocolate Rain
Only in the past is what they say
Chocolate Rain
Raised your neighborhood insurance rates
Chocolate Rain
Makes us happy ‘livin in a gate
Chocolate Rain
Made me cross the street the other day
Chocolate Rain
Made you turn your head the other way (Chorus)
Chocolate Rain
quickly crashing through your veinshistory
Chocolate Rain
Using you to fall back down again
Chocolate Rain
Seldom mentioned on the radio
Chocolate Rain
Its the fear your leaders call control
Chocolate Rain
Worse than swearing worse than calling names
Chocolate Rain
Say it publicly and you’re insane
Chocolate Rain
No one wants to hear about it now
Chocolate Rain
Wish real hard it goes away somehow
Chocolate Rain
Makes the best of friends begin to fight
Chocolate Rain
But did they know each other in the light?
Chocolate Rain
Every February washed away
Chocolate Rain
Stays behind as colors celebrate
Chocolate Rain
The same crime has a higher price to pay
chocolate Rain
The judge and jury swear it’s not the face (Chorus)
Chocolate Rain
Dirty secrets of economy
Chocolate Rain
Turns that body into GDP
Chocolate Rain
The bell curve blames the baby’s DNA
Chocolate Rain
But test scores are how much the parents make
Chocolate Rain
‘Flippin cars in France the other night
Chocolate Rain
Cleans the sewers out beneath Mumbai
Chocolate Rain
‘Cross the world and back its all the same
Chocolate Rain
Angels cry and shake their heads in shame
Chocolate Rain
Lifts the ark of paradise in sin
Chocolate Rain
Which part do you think you’re ‘livin in?
Chocolate Rain
More than ‘marchin more than passing law
Chocolate Rain
Remake how we got to where we are. (Chorus)


New Feature / Resource

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Putting the U.S. Economic Crisis in Perspective

From the Bullet

Leo Panitch

It is time to take stock. The centrality of the American economy to the
capitalist world — which now literally does encompass the whole world —
has spread the financial crisis that began in the U.S. housing market
around the globe. And the economic recession which that financial crisis
has triggered in the U.S. now threatens to spread globally as well.

Capitalism has had an incredible run — politically and culturally as well
as economically — since the stagflation crisis of the 1970s. The
resolution of that crisis required, as economists put it at the time,
‘reducing expectations’ of the kind nurtured by the trade union militancy
and welfare state gains of the 1960s. This was accomplished via the defeats
suffered by trade unionism and the welfare state since the 1980s at the
hands of what might properly be called capitalist militancy. This was
accompanied by dramatic technological change, massive industrial
restructuring, labour market flexibility and the over — all discipline
provided by ‘competitiveness.’

It was also accompanied, of course, by massive economic inequality. But
this did not mean capitalism was no longer able to integrate the bulk of
the population. On the contrary, this was now achieved through the private
pension funds that mobilized workers savings, on the one hand, and through
the mortgage and credit markets that loaned them the money to sustain high
levels of consumer spending on the other. At the centre of this were the
private banking institutions which, after their collapse in the Great
Depression, had been nurtured back to health in the postwar decades and
then unleashed the explosion of global financial innovation that has
defined our era.

The question begged by the current crisis is whether capitalism’s capacity
to integrate the mass of people through their incorporation in financial
markets has run out of steam. That the fault line should have appeared in
‘sub-prime’ mortgage loans to African-Americans is hardly surprising —
this has always been the Achilles heel of working class incorporation into
the American capitalist dream. But an economic earthquake will actually
only result if there is a devaluation of working class assets in general
through a collapse of housing prices and the stock and bonds in which their
retirement savings are invested.

We are by no means there yet. The role being played to prevent just this by
the Federal Reserve, very much acting as the world central bank in light of
the global implications of a U.S. recession, should once and for all dispel
the illusion that capitalist markets thrive without state intervention. It
was through the types of policies that promoted free capital movements,
international property rights and labour market flexibility that the era of
free trade and globalization was unleashed. And this era has been kept
going as long as it has by the repeated coordinated interventions
undertaken by central banks and finance ministries to contain the periodic
crises to which such a volatile system of global finance inevitably gives

The Fed has repeatedly poured liquidity into its financial system at the
first sign of trouble. Yet the capacity of the system to go on integrating
ordinary Americans though the expansion of investor and credit markets in
this way may have reached its limit. This is indeed suggested by the Bush
administration’s sudden (non-military) Keynesian turn with its recently
announced $150 billion fiscal stimulus. The announcement at the same time
of massive public expenditure cutbacks by the Schwarzenegger administration
in California is a reminder, however, that fiscal stimulus at the federal
level may be undone at the state level.

This is especially likely to be the case with municipal government
cutbacks, given their massive dependence on property taxes. The recent
evidence that the financial institutions that specialize in selling risk
insurance on municipal bonds are enveloped in the credit crisis further
compounds the problem. This indeed brings to mind the extent to which it
was municipal governments that were on the front lines of the Great
Depression. The kind of fiscal stimulus that is needed to boost the economy
now probably entails public infrastructure spending, but the type of state
intervention that brought us financial globalization is not well suited to
this, as the collapsed levies of New Orleans and the collapsed bridges of
Minneapolis prove.

To see this go unmentioned in the Democratic primary debate this week may
be hardly surprising given the absence of even a trade union campaign
around this, but it bespeaks an impoverishment of American politics that in
fact goes all the way back to the New Deal. The issue of economic democracy
that had been placed on the political agenda alongside the New Deal’s
public infrastructure projects was set aside for the remainder of the
century after the FDR’s administration’s self-described ‘grand truce with
capital’ in the late 1930s.

There should be no illusion that a recession, or even a depression, will
necessarily bring the issue of economic democracy back onto the U.S.
political agenda. It would require a transformation of American politics to
do so — and that too would have global implications.

Leo Panitch is Canada Research Chair in Comparative Political Economy at
York University.