exercising the option on the social contract.
It seems unjust. But look what happened to the global economy after Lehman failed. Unemployment in the U.S. went to 9.5 per cent. It’s not just Wall Street that suffers when you ‘teach people a lesson.’ The tragedy of financial populism is that you do terrible things to innocent people. – Timothy Geithner
You can’t just go out and shoot the bankers. You can’t have an economy without a functioning credit system. People are angry. They’re furious. But you have no option but to live with these people. — Barney Frank, in James B. Stewart, A Reporter at Large, “Eight Days,” The New Yorker, 21 September 2009.
Obama will have to directly attack the fortified bastions of the newest ‘new class’—the makers of the paper economy in which he came of age—if he is to accomplish anything. These interests did not spend fifty years shipping the greatest industrial economy in the history of the world overseas only to be challenged by a newly empowered, green-economy working class. They did not spend much of the past two decades gobbling up previously public sectors such as health care, education, and transportation only to have to compete with a reinvigorated public sector. They mean, even now, to use the bailout to make the government their helpless junior partner and if they can they will devour every federal dollar available to recoup their own losses, and thereby preclude the use of any monies for the rest of Barack Obama’s splendid vision. — Kevin Baker, Barack Hoover Obama: The Best and the Brightest Blow It Again, Harper’s Magazine, July 2009.
In the quotations above, what’s so remarkable about the difference in perspective between, on the one hand, Timothy Geithner and Barney Frank, and, on the other, Kevin Baker, is their sense of possibility for anything other than neoliberal capitalism. Geithner and Frank simply cannot imagine anything outside the binary of inegalitarian “free” markets or what Geithner calls “financial populism.” It’s either give the über-rich what they want or shoot them.
Baker, thankfully, calls for government to grow up. Part of this growing up involves imagining a new relationship between government and the financial sector, and a rethinking of assumptions about capitalism and the equitable distribution of wealth. It means imagining government neither as witch doctor, hoodwinking the populace or conjuring up magic cures, nor as witch hunter, madly convicting the guilty and innocent alike.
Instead, the financial crisis offers a moment to rethink what should be normal in our society, what should be privileges (the privilege to be “too big to fail,” for instance) and what should be rights (health care, a good education, policy for the greater good of all). It’s a chance to reimagine what freedom is and whose freedom “free” markets and the government policies that shape them really serve. And, as Baker suggests, it’s a time to admit that there has to be a struggle—probably a nasty one—between those who reap the rewards of the current ideologies of neocapitalism and those who seek a better alternative to a jobless recovery and the suffering it causes along the way even if the economy comes booming back.
And since it was government, after all, that stepped in and saved us from a financial catastrophe wrought by anti-government free marketeers, there is a chance now to take stock of the possible positive and beneficial roles for American government all grown up. Contrary to Barney Frank (bless him), there are other options to exercise, other bonds that should reach their maturity in the coming years.