This article from the Huffington Post indicates that financial reform is most likely on the right track. If a JP Morgan banker (James Glassman) is complaining about financial reform in such a childish manner, Congress must be on to something (even if the bill leaves much to be desired).
Notice that Glassman doesn't offer any substantive policy criticisms of the reform. Rather he speaks in expansive generalities and mocks Michigan's horrible economic plight. This is yet another example of the isolated bubble that such bankers operate within. Glassman claims that Goldman Sachs and other banks were no more responsible for this crisis than Congress. A fair point, if you assign Congress the blame for repealing important regulatory rules and failing to enforce ones that did exist. But we can also point to Goldman Sachs, JP Morgan, and the other banks that ferociously lobbied for years to deregulate the industry. And we can also point to a private sector that does everything it can to avoid regulation.
Essentially Glassman blames the police for allowing a crime, without placing any of the blame on those who actually committed the crime. This is beyond despicable, and Glassman has not a leg to stand on. I would be interested in hearing actual suggestions on how reform can be improved, as opposed to sweeping statements about the "fundamental principles of market economics."
Tuesday, May 4, 2010
Friday, April 16, 2010
U.S. Accuses Goldman Sachs of Fraud
In an article in Today's New York Times, the SEC has filed a civil law suit accusing Goldman Sachs of selling investments they knew would fail, and then covertly betting against those sales, thereby richly profiting from the losses taken by their investors.
This is a perfect example of a zero sum gain, whereby one person only wins when someone else loses. of course, this example also includes straight-up fraud, which is even more ethically disturbing than taking advantage of asymmetrical information.
This is yet more evidence that the financially industry has become nothing more than a dishonest car mechanic who tells you your brakes need fixing when they don't.
This is yet another example of why we need financial reform in this country. It seems odd to me that a single political party is unified against this reform. It couldn't be that they are hoping to obstruct and win short-term political points...
This is a perfect example of a zero sum gain, whereby one person only wins when someone else loses. of course, this example also includes straight-up fraud, which is even more ethically disturbing than taking advantage of asymmetrical information.
This is yet more evidence that the financially industry has become nothing more than a dishonest car mechanic who tells you your brakes need fixing when they don't.
This is yet another example of why we need financial reform in this country. It seems odd to me that a single political party is unified against this reform. It couldn't be that they are hoping to obstruct and win short-term political points...
Thursday, April 15, 2010
The United States Financial Sector
I want to expand on a thought in my previous post and take it in a slightly new direction. I argued recently that Republicans (writ large, I take pains not to over-generalize as much as possible), true to Adam Smith, believe that the main goal in life is to maximize wealth, as individuals and as a society.
The distribution of this wealth is not important, just the sum total. Taken to an extreme, these people would prefer a world with 10 trillion dollars of wealth to a world with 5 trillion dollars of wealth, even if in the 10 trillion dollar world, only 10% of the population holds all of the wealth. Meanwhile in the 5 trillion dollar world, the wealth is spread evenly enough to afford everyone the basics of life: food, shelter, and basic health care.
This is a numbers game. The ultimate goal is to make the numbers as large as possible, without concern for how that tangibly affects human lives. For people who subscribe to this idea (and it is fairly predominant on the Right), this goal is akin to a moral good, because money equals happiness and success. And if you maximize the amount of money in the world, the argument goes, there is more for everyone. And, according to these folks, all it takes to acquire a chunk of this money is hard-work, intelligence, and an unhindered free market.
Of course there is no truth to these claims. The world of 10 trillion dollars does indeed have more money. But this world only exists where there is shocking inequality, massive market failures, poverty, and limited freedom.
In this world, where free-market advocates point to fairly arbitrary measures of the economy like GDP or the Dow Industrial Average, people put less of an emphasis on the equity and distribution of the growing GDP or the growing stock markets. By design, (and this is not meant to imply some diabolical conspiracy) the economic regime of the United States tends towards gross inequities in wealth. And wealth often begets more wealth, while poverty begets more poverty.
I believe that laws of supply and demand are true. I believe in markets and the power of incentives and price signals. And like anything else, these things can be abused, twisted and distorted to serve the interests of those who are able to either a) take advantage of loopholes in existing law or b) change existing law to their benefit. There is a place for investment banks and stock markets. They serve important functions. But when entire corporations exist solely to make money with no underlying value, or when corporations are willing to risk the bankruptcy of entire nations, I believe things have gone too far.
What you have them do, opponents will say, the ultimate responsibility is to the shareholders and to make money. Well I disagree. When all morality and sense of duty and responsibility has left the boardroom, financial and other crises occur.
The financial industry in the United States is morally bankrupt. It is guilty of multiple transgressions of ethics and the law, or at least the spirit of the law. Of course it is not the only industry guilty of reckless self-interest, but the consequences of its abuses are borne by people around the world, in ways only exceeded by polluting industries.
Now Republicans are fighting the financial reform bill, saying all it will do is provide future bailouts to banks. That claim is completely untrue. If anything the financial reform bill is too weak. But it is a start. I'll delve more into specifics and try to avoid ranting in my next post.
The distribution of this wealth is not important, just the sum total. Taken to an extreme, these people would prefer a world with 10 trillion dollars of wealth to a world with 5 trillion dollars of wealth, even if in the 10 trillion dollar world, only 10% of the population holds all of the wealth. Meanwhile in the 5 trillion dollar world, the wealth is spread evenly enough to afford everyone the basics of life: food, shelter, and basic health care.
This is a numbers game. The ultimate goal is to make the numbers as large as possible, without concern for how that tangibly affects human lives. For people who subscribe to this idea (and it is fairly predominant on the Right), this goal is akin to a moral good, because money equals happiness and success. And if you maximize the amount of money in the world, the argument goes, there is more for everyone. And, according to these folks, all it takes to acquire a chunk of this money is hard-work, intelligence, and an unhindered free market.
Of course there is no truth to these claims. The world of 10 trillion dollars does indeed have more money. But this world only exists where there is shocking inequality, massive market failures, poverty, and limited freedom.
In this world, where free-market advocates point to fairly arbitrary measures of the economy like GDP or the Dow Industrial Average, people put less of an emphasis on the equity and distribution of the growing GDP or the growing stock markets. By design, (and this is not meant to imply some diabolical conspiracy) the economic regime of the United States tends towards gross inequities in wealth. And wealth often begets more wealth, while poverty begets more poverty.
I believe that laws of supply and demand are true. I believe in markets and the power of incentives and price signals. And like anything else, these things can be abused, twisted and distorted to serve the interests of those who are able to either a) take advantage of loopholes in existing law or b) change existing law to their benefit. There is a place for investment banks and stock markets. They serve important functions. But when entire corporations exist solely to make money with no underlying value, or when corporations are willing to risk the bankruptcy of entire nations, I believe things have gone too far.
What you have them do, opponents will say, the ultimate responsibility is to the shareholders and to make money. Well I disagree. When all morality and sense of duty and responsibility has left the boardroom, financial and other crises occur.
The financial industry in the United States is morally bankrupt. It is guilty of multiple transgressions of ethics and the law, or at least the spirit of the law. Of course it is not the only industry guilty of reckless self-interest, but the consequences of its abuses are borne by people around the world, in ways only exceeded by polluting industries.
Now Republicans are fighting the financial reform bill, saying all it will do is provide future bailouts to banks. That claim is completely untrue. If anything the financial reform bill is too weak. But it is a start. I'll delve more into specifics and try to avoid ranting in my next post.
Tuesday, March 23, 2010
Political Consequences of Health Care Reform
Following the House of Representatives vote on the Senate health care bill and the Reconciliation bill (which will now go back to the Senate), Republicans threatened to attempt to repeal the bill, they crowed that the vote would decimate Democrats in the 2010 midterm elections, and they threatened to grind Congress to an even more profound standstill for the rest of the year.
The most explicit threat of gridlock came from the man who campaigned on the slogan of "Country First," John McCain. "There will be no cooperation for the rest of the year," he told an Arizona radio station. "They have poisoned the well in what they've done and how they've done it." The accusation is that Democrats used unethical, arrogant, and unconstitutional methods to pass health care reform. We have all heard the Democratic responses to this: that Republicans have used the reconciliation procedure almost twice as much as Democrats, that they have had countless opportunities over the last year to engage and offer ideas on health care (and in fact did so), and that it was Republicans who moved immediately to accusations of socialism, death panels, and government takeovers. These are all facts, not be argued. There was no public substantive policy debate from the Right. Instead they encouraged and fed a movement (the Tea Party) that revels in bigotry, homophobia, xenophobia, while lacking any sort of realistic or pragmatic worldview.
This is John McCain's sad legacy. The maverick is gone, replaced by a bitter, enraged man who acts simply out of a need for vengeance and political expediency. He now opposes, simply to oppose, a host of policy positions that he had previously supported. He has become a slave to the masses, lacking thoughtfulness and opinions of his own. I believe John McCain has come to characterize the Republican party as a whole. The true moderates are gone, and those who were moderates for political purposes only have sided with the hardliners and ideologues, because it is politically expedient.
Obama, Pelosi, and the Democrats certainly played some politics, and still will. But they also have appealed to a sense of morality and compassion that they believe is present in all humans. They have shown their willingness to sacrifice political gain for America's benefit. In the face of that, Republicans, and pundits assume that Democrats will pay dearly at the polls in November.
I disagree. I believe that now is a great opportunity for Democrats to not give an inch to expectant Republicans, but instead to forge ahead and be bold in trying to not only retain their majorities in both Houses, but to make gains. Democrats should not be apologetic about passing health care reform and they should explain why it was Republicans who, in the face of a massive economic crisis refused to help America, or in the face of a massively deficient health care system refused to help Americans. Or who, facing the largest environmental and humanitarian crisis in the history of humanity, refuse to make sacrifices now for the benefit of future generations (I find it ironic that intergenerational equality is all the Right talks about when referencing government spending).
I do not mean to -overgeneralize, and there are many exceptions to the statements I have made today, but the modern Republican party seems to be obsessed with one thing: money. For them, money is the ultimate indicator of happiness, of utility, and of a good life. And it does not need to be spread out evenly, there just has to be as much as possible. Nevermind that 5% of the population has 80% of the wealth. All that matters is that there is more wealth. Now of course not all Republicans in the country feel this way, but every single Republican in Congress has voted this way. And as a lawmaker, you express your principles and your ideals, as well as your pragmatism and common sense, through your vote.
Democrats have myriad flaws. They often succumb to similar temptations. But this president has shown a respect for human life and dignity such that I have never seen in my life. Above any ideology he espouses pragmatism and common sense,while still retaining high-minded ideals that often get in the way of our daily lives. He breaths hope, compassion, and a strong love for this country into our national discourse. He manages to rise above pettiness and discord, and he tries again and again to find common ground and compromise. But when no ground is yielded from others, he does not back down, and he fights for the good.
This is the narrative Democrats should tell in the upcoming elections, because it is the truth. If you make a decision, and you believe in it, own that decision. It was almost impossible, through the lies, distortions, and spin, to truly understand what a bill of this magnitude does. No wonder the polls showed what they did. But have no doubt, this health care reform bill (despite flaws), is a great thing. And it will have lasting benefits for this country, both economically and morally.
Republicans have lost something in these last several years. Their compasses no longer point to true north. Their love of small government and lower taxes has shown itself simply to be love of themselves. And they should be forced to wander in the wilderness yet longer.
The most explicit threat of gridlock came from the man who campaigned on the slogan of "Country First," John McCain. "There will be no cooperation for the rest of the year," he told an Arizona radio station. "They have poisoned the well in what they've done and how they've done it." The accusation is that Democrats used unethical, arrogant, and unconstitutional methods to pass health care reform. We have all heard the Democratic responses to this: that Republicans have used the reconciliation procedure almost twice as much as Democrats, that they have had countless opportunities over the last year to engage and offer ideas on health care (and in fact did so), and that it was Republicans who moved immediately to accusations of socialism, death panels, and government takeovers. These are all facts, not be argued. There was no public substantive policy debate from the Right. Instead they encouraged and fed a movement (the Tea Party) that revels in bigotry, homophobia, xenophobia, while lacking any sort of realistic or pragmatic worldview.
This is John McCain's sad legacy. The maverick is gone, replaced by a bitter, enraged man who acts simply out of a need for vengeance and political expediency. He now opposes, simply to oppose, a host of policy positions that he had previously supported. He has become a slave to the masses, lacking thoughtfulness and opinions of his own. I believe John McCain has come to characterize the Republican party as a whole. The true moderates are gone, and those who were moderates for political purposes only have sided with the hardliners and ideologues, because it is politically expedient.
Obama, Pelosi, and the Democrats certainly played some politics, and still will. But they also have appealed to a sense of morality and compassion that they believe is present in all humans. They have shown their willingness to sacrifice political gain for America's benefit. In the face of that, Republicans, and pundits assume that Democrats will pay dearly at the polls in November.
I disagree. I believe that now is a great opportunity for Democrats to not give an inch to expectant Republicans, but instead to forge ahead and be bold in trying to not only retain their majorities in both Houses, but to make gains. Democrats should not be apologetic about passing health care reform and they should explain why it was Republicans who, in the face of a massive economic crisis refused to help America, or in the face of a massively deficient health care system refused to help Americans. Or who, facing the largest environmental and humanitarian crisis in the history of humanity, refuse to make sacrifices now for the benefit of future generations (I find it ironic that intergenerational equality is all the Right talks about when referencing government spending).
I do not mean to -overgeneralize, and there are many exceptions to the statements I have made today, but the modern Republican party seems to be obsessed with one thing: money. For them, money is the ultimate indicator of happiness, of utility, and of a good life. And it does not need to be spread out evenly, there just has to be as much as possible. Nevermind that 5% of the population has 80% of the wealth. All that matters is that there is more wealth. Now of course not all Republicans in the country feel this way, but every single Republican in Congress has voted this way. And as a lawmaker, you express your principles and your ideals, as well as your pragmatism and common sense, through your vote.
Democrats have myriad flaws. They often succumb to similar temptations. But this president has shown a respect for human life and dignity such that I have never seen in my life. Above any ideology he espouses pragmatism and common sense,while still retaining high-minded ideals that often get in the way of our daily lives. He breaths hope, compassion, and a strong love for this country into our national discourse. He manages to rise above pettiness and discord, and he tries again and again to find common ground and compromise. But when no ground is yielded from others, he does not back down, and he fights for the good.
This is the narrative Democrats should tell in the upcoming elections, because it is the truth. If you make a decision, and you believe in it, own that decision. It was almost impossible, through the lies, distortions, and spin, to truly understand what a bill of this magnitude does. No wonder the polls showed what they did. But have no doubt, this health care reform bill (despite flaws), is a great thing. And it will have lasting benefits for this country, both economically and morally.
Republicans have lost something in these last several years. Their compasses no longer point to true north. Their love of small government and lower taxes has shown itself simply to be love of themselves. And they should be forced to wander in the wilderness yet longer.
Friday, March 12, 2010
Open Letter to the Deerfield Academy Community
I write dismayed for Deerfield Academy and its tarnished legacy. I have recently learned that David Koch has been named a lifetime trustee of the Academy. Deerfield has never before granted such status. Unfortunately, this privilege has been given to a man profoundly unworthy of the honor.
I have long known of David Koch's political affiliations and business practices and felt uneasy about his looming presence on Albany Road. Mr. Koch is a billionaire who has made his fortune from oil and gas interests. He has many radically conservative ideas that insult not only the values and heritage of Deerfield, but of the United States. For years he has quietly funded "grassroots" organizations that co-opt the passion and anger of Americans who feel disenfranchised. Ironically, it is his own worldview that conspires to disenfranchise these Americans.
David Koch's flagship political group, Americans for Prosperity, has for decades quietly funded tea-party-esque rallies against health care reform, undermined the science of climate change, and pushed strongly for pro-business interests that will benefit his firm, Koch Industries. He denies the science of global warming, and argues against further regulating the very Wall St. firms that caused the recent financial crisis.
David Koch presents himself as a caring philanthropist. As Deerfield students know, everything he funds bears his name. This is true of his philanthropic projects everywhere. Yet his name rarely appears as the patron of political groups that work to undermine legitimate and necessary policy reform in health care, climate change, and financial regulation. He quietly sows the seeds of fear and hatred, yet publicly reaps applause and gratitude.
I encourage every Deerfield student and faculty member to research the real David Koch, and to ponder if he is a man worth emulating when you use the facilities bearing his name. For here is a man who has proven himself unworthy of Deerfield's heritage, and yet he has somehow managed to buy one of the highest honors in the Academy's history.
I have long known of David Koch's political affiliations and business practices and felt uneasy about his looming presence on Albany Road. Mr. Koch is a billionaire who has made his fortune from oil and gas interests. He has many radically conservative ideas that insult not only the values and heritage of Deerfield, but of the United States. For years he has quietly funded "grassroots" organizations that co-opt the passion and anger of Americans who feel disenfranchised. Ironically, it is his own worldview that conspires to disenfranchise these Americans.
David Koch's flagship political group, Americans for Prosperity, has for decades quietly funded tea-party-esque rallies against health care reform, undermined the science of climate change, and pushed strongly for pro-business interests that will benefit his firm, Koch Industries. He denies the science of global warming, and argues against further regulating the very Wall St. firms that caused the recent financial crisis.
David Koch presents himself as a caring philanthropist. As Deerfield students know, everything he funds bears his name. This is true of his philanthropic projects everywhere. Yet his name rarely appears as the patron of political groups that work to undermine legitimate and necessary policy reform in health care, climate change, and financial regulation. He quietly sows the seeds of fear and hatred, yet publicly reaps applause and gratitude.
I encourage every Deerfield student and faculty member to research the real David Koch, and to ponder if he is a man worth emulating when you use the facilities bearing his name. For here is a man who has proven himself unworthy of Deerfield's heritage, and yet he has somehow managed to buy one of the highest honors in the Academy's history.
Wednesday, February 24, 2010
America's Clean Technology Trade Deficit
Great article in the American Prospect on the United States' Clean Technology Trade Deficit and how we are losing out on a burgeoning multi-trillion dollar industry to Asia and Europe. A coherent argument for a more holistic federal approach to bringing clean technology manufacturing to the United States.
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