Thomas Frank: "Pity the Billionaire"
http://thedianerehmshow.org/shows/2012-01-09/thomas-frank-pity-billionaire
Americans responded to the Great Depression with resolve: Wall Street crooks went to prison, public works programs created jobs, and a new social safety net aided the poor and elderly. By the late 1930s, Democrats held a majority in Congress, which lasted for nearly 60 years. The 2008 financial meltdown nearly equaled the Great Depression. But the political outcome was starkly different: Republicans took back the House in 2010 as public rage shifted from Wall Street to government. Diane talks to author Thomas Frank about what he calls a "hard-times swindle," which he says fueled an unlikely conservative comeback.
Guests
Thomas Frank
author of "What's the Matter with Kansas?" and monthly columnist for Harper's magazine
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johnandere wrote: “Take a look at GDP and the economy between mid-2000 and the time Bush took office - headed to the toilet.” Our take at the time was all that later became known as irrational exhuberance was the under regulated money that could no longer generate unsustainable growth in tech (oversold by what we considered 4 fold). We were frightened by its move into the unsustainable housing market in such a big way. I believe it generated 43% of new jobs in housing construction, which we didn’t see as investing in infrastructure and reasonable technologies that would create more sustainable growth. “The tax cuts were needed and were stimulative to job growth and GDP.” See http://readersupportednews.org/opinion2/279-82/9316-focus-qjob-creatorsq.... Paul O’Neil and 450 economists didn’t think so, were they substantially wrong? I voted for Bush hoping he would fix the lax regulations established under Clinton, I certainly don’t exclusively blame Bush, but Cheney’s, “Reagan proved deficits don’t matter”, comment sickened me, almost as much as them delaying the Enron corrective actions.
“The rest of us knew that wasn't true and now the numbers are proving it and F&F are coming hat in hand to the American people for a bailout.” Friends and relatives that worked in Real Estate would disagree on the relative quality of F&F loans to the unleashed subprimes starting in 2004. Many quit rather than participate in the over promotion as early as 2004, and the smarter investors got out in 2006, with a few taking chances into 2007. “Both sides have plenty of blame to shoulder.” I really agree with a lot of what you said. A possible exception,
“… abolish F&F and sell their loans off to the highest bidder. “ See http://readersupportednews.org/opinion2/287-124/9218-american-paradox-18... you might be as appalled as I was at who the high bidders are.
Thomas, do you realize how intellectually arrogant and condescending you sounded when you responded to caller John’s comment by quickly saying “This is the Community Reinvestment Act myth”.
Then you said, “there's been a lot of research done into this”. Aren’t you “falling back on expertise” just as you criticized fellow Democrats of doing earlier in the interview. When people fall back on expertise in discussions, it often feels condescending like them saying, “Please, we don’t have time to rehash basic, established knowledge for the slow people in the discussion”.
You intellectual Democrats act like you are frustrated with the ignorance of average people. You blow them off with terse come-backs that sound like you are above talking to them on their level. You act too busy with more sophisticated discussions to waste time explaining basic knowledge with people far beneath your knowledge level.
This is why the Democrats can’t make much traction with average non-expert people. They act too high-minded to talk to them on their level.
Thomas, maybe you should take time off from your career-promoting book writing to practice selling your ideas to average, non-expert people. Show them respect by taking the time to find a common ground of knowledge where you can help them understand how some common beliefs are myths.
johnandere wrote:, sane wrote:
"... This graph will help:
http://www.heritage.org/budgetchartbook/growth-federal-spending-revenue"
The way I interpret the chart is that the "temporary" Bush tax cuts did pretty much what Paul O'Neil and 450 economists predicted. And when have we ever gone to war without raising taxes? If a more progressive tax policy was in place, interest income and capital gains taxed at the Clinton rates, we wouldn't have had the trillions in revenue reduction that were the biggest contributor to deficits in the last three years. What I would call a velocity of money too concentrated in the financial sector, where it is taxed so much less than a more useful velocity of money in the middle class, could have kept the revenue reduction from being so severe. I know too many formerly productive small business people, self-employed, and otherwise very productive people who are just comfortably waiting on the sidelines. They are denied the credit they used so productively before and no longer contribute to the productivity that added so much value to our currency. They also contributed so much more to our revenue, usually paying some of the highest rates in a country which ranks something like 30th for all taxes as a percentage of GDP. The rest of the economically developed world pays more and seems happier to do so.
I know some will throw foreign debt into the argument but I can only attribute too much of it to world markets racing to the bottom of rational financial regulation and too much being skimmed, at least as debt obligations , by the top players charging far more than they ever used to for some of the shabbiest financial products I can imagine in this day and age.
Stephen_Dallas wrote:
"You intellectual Democrats act like you are frustrated with the ignorance of average people...Show them respect by taking the time to find a common ground of knowledge where you can help them understand how some common beliefs are myths."
But THAT is the myth, Stephen! They're not smarter, and not more knowledgable than the average Joe. They just THINK they are.
Jim Young wrote:
"If a more progressive tax policy was in place, interest income and capital gains taxed at the Clinton rates, we wouldn't have had the trillions in revenue reduction that were the biggest contributor to deficits in the last three years. "
Sorry, Jim, I have to disagree. Look at the SPENDING line! The Bush tax cuts were supposed to raise revenues and they did (based on the Reagan model) but the f'ing Republican Congress just kept on a-spendin'. The solution is not to grow gub'mint and raise taxes to support it (you can take every penny from the 1% and it won't make a dent in the debt). The solution is to shrink government (and therefore FG dictates), make people more self-reliant and grow our way out of debt. Sorry, that's the only thing that's going to work and it's the only thing that ever has.
And finally, back to F&F. I don't care who buys the loans. I just want them off the public books. As for F&F vs. the big banks, you are splitting hairs between a fish rotting for one week or two. They are both rotten, it's just a matter of degree. F&F represents probably the largest example of the FG d***ing around in the market - and a critical one at that. That ALWAYS and I mean ALWAYS ends badly. If you don't believe in free market principles, then lets just throw all our chips in a pot and let some central planner dole them back out. You know, from each according to his ability to each according to his need. Something like that. That would be better than the "pretend" free market we have now. Government messing in free markets truly is our downfall, from housing to energy to agriculture.
I mostly agree with Thomas Frank in this interview. But his terse response to a caller undermines his points.
The big overall driving force that led to the 2008 banking crisis was the right-wind push for deregulation. Look up Phil Gramm’s (Texas Republican congressman) efforts in deregulating the banking industry. Multiple regulations that were implemented as “lessons learned” from the Great Depression, were thrown out over the last 20 years.
There were many contributing factors to the banking crisis, but at the top of the list was the lack of knowledge and control of the unregulated “Credit Default Swaps” market. This is a giant market (larger than the US gross domestic product, GDP) that basically links together the default risk (loan write-off, company collapse) of individual banks. So, when Lehman collapsed on September 15, 2008 from bad subprime mortgages, it threatened the collapse of other banks. Thus, overnight lending between banks (the “Money Market”) stopped. Money Markets “froze”. Overnight lending between banks is critical for daily bank operations. Bank operations became severity limited. This critical condition scared businesses. So they stopped spending extra money, and became focused on building cash balances needed to help survive a strong economic downturn. This pull-back in business spending created the strong downturn, a “self fulfilling prophesy”.
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When a bank goes bankrupt, the money loaned to it will not be paid back to the lender. So, banks stopped lending to each other after the Lehman bankruptcy fearing that a bank they lend to will go bankrupt taking their loaned money with it. The fear of another bank collapsing was greatly increased from the Lehman collapse in large part because the Credit Default Swaps” market is not on an open, visible exchange, like the stock market. Since, there was no way to know which banks were vulnerable to collapse from the Credit Default Swaps, banks stopped lending to all other banks.
Also, having a visible Credit Default Swaps exchange would have enabled regulators to know the extent of the risk years earlier, allowing them to take action to reduce the risk. Note that government oversight and regulation of a country’s banking system is required for economic stability. Bad bets in the Credit Default Swaps market by one bank may lead to its failure, but it mostly doesn’t undermine the economic health of a country. But, bad bets in the Credit Default Swaps market by many banks could combine into a failure of a country’s economic system.
Occupy Wall Street movement is a big part of the populist reaction to the financial crisis that comes from the left. Problem is, much of that energy is likely to go to third party candidates, rather than to President Obama.
Seems like the pendulum of American politics swings very fast between populist reaction from the left and populist reaction from the right. A lot of swing voters tend to be fickle.
Problems leading up to the crisis of 2008 have been evident for a long time. Real estate bubble leading to housing that wasn't affordable for large segments of the population. That situation, combined with other things and growing dissatisfaction with President Bush created a populist backlash from the left in 2006 that brought lots of Democrats to Congress. Then, after the crash of 2008, that populist movement was in full swing helping Obama get to the White House.
By 2010, the fickle tendency of many voters was already dissatisfied with Obama after only 2 years in office. People either didn't have enough enthusiasm to show up at the polls, and/or the Tea Party movement was on the rise. By 2010 the pendulum was already swinging right after it had swung left in 2006 and 2008.
Most recently it seems to be swinging left again with Occupy Wall Street, but much of the energy in that movement is toward third party which may not do much good in this context. Hard to say if a populist swing toward the left will last, or dissipate in time for the 2012 election.
Thomas Frank describes the symptom just like the few others acquiring media attention. Money is the GOP formula to manufacture and channel discontent. Money feeds the media to share an ideology. Motivating civic engagement is the recourse. Lawrence Lessig is another rare individual acquiring public attention.
Few will ever read my response to his interview:
Some describe the political problem, but only hints at a solution. It wasn't a single event nor individual contributor causing the decline of representative government. No single solution will reverse the situation. The problem can only be widdled down through the civic engagement of many.
I guarantee you hundreds are calling Lessig and Frank or sending them email wishing to engage in a solution. Each will fail to connect the passion of these individuals. Just like nearly all existing forms of mass media fails to connect citizens. Our communication model has evolved from solitude, though it remains stagnant in a one to many channel of thought. The problem may have less to do with money or politicians than the fact communication has not evolved to support a many-to-many form of participation, understanding, and solution.
Look at this blog. Is there any collaboration going on here or is everyone clamoring to their perspective? Is there any hint of solution drawing participation to move a thought to actuality? No I don't think so.
The current form of media should be blamed as much as Lessig's suggestion in the demise of representative government. The one to many channeling of thought ignores the voices of the citizens and provides little opportunity for civic engagement.
What is the Do Good Gauge?