One of the necessary conditions for a democracy to work is a critical mass of policy wonks and political junkies – you need an informed public who understand what the issues are, and, structurally, how power is amassed and wielded, so everyone can agree, more or less, on what the current rules should be, and of course on which policies should be pursued and which dismissed as dangerous nonsense. It’s a nifty idea, and an impossible one. There’s a reason we don’t have direct democracy here. This isn’t ancient Athens, where democracy was sort of invented. There you had a small preindustrial homogeneous society, where almost all the information-flow was oral, and thus quite personal, and only as complex as one’s own memory and intellect could manage. What we would think of as literacy was quite rare, and storing thoughts, for any kind of future reference, was both cumbersome and expensive. As an information storage-and-retrieval medium, clay tablets kind of suck. Sheets of pounded papyrus fibers, that Egyptian invention, weren’t much better. Parchment was a long way off. This was an oral culture, and one where received wisdom – what everyone just knew – was pretty much all the information there was. That makes direct democracy easy. There’s not all that much to fight about. And this was centuries before the Jesus-people popped up with their radical ideas. And the Romans had to deal with them. The age of Athenian democracy was ancient history by then.
And we have to settle for representative democracy, not direct democracy – we have a republic, not a democracy. There are far too many of us for that direct democracy thing. And we’re certainly not homogeneous – there’s probably a Tongan-American Miniature Railroad Enthusiasts lobby out there somewhere. And we’re a literate society – anyone can look up anything, from amazing rapidly increasing vast pools of accessible information. Yes, that does not speak to people’s judgment and analytical skills, or to the issue of how much of that information out there is laughably bogus – but, as they say, you could look it up. And as for what everyone just knows is true – a base of shared conventional and simply accepted wisdom – that’s now a joke. We all pride ourselves on not accepting the conventional wisdom – or we pride ourselves on accepting the rigid conventions of Fox News guys like Beck and O’Reilly, or their opposites on the other side. Received wisdom – what everyone just knows – depends on who is best a pushing your buttons. We can’t even agree on the basics.
And of course the issues are more complex. Athenians might have argued over what to do about the warlike Spartan jerks next door, but we’re worried, at the moment, about how our intervening in Libya will effect what happens in Bahrain, where we park our fleet, and Saudi Arabia, the key to world’s oil supply, and what it means with Iran, as they work on their bomb, and, as a fifth of Europe’s oil comes from Libya, what it would mean if this mess stops the European economies dead in their tracks. Europe in chaos for a decade does us no good. It’s a puzzle, as is all the economic stuff. The Tea Party folks want to shut down the government unless we agree to cut most everything they hate – NPR and Planned Parenthood and any school that teaches science – not really, but one never knows – and all the rest – and the Business Roundtable says a shutdown, even a short one, would end the recovery and throw us back into a major recession, or worse. As for refusing to increase the debt limit, and have America default on everything, that’s on the table – but that would assure the collapse of the world’s economies, as there would be no one safe haven anywhere for anyone to park their money. US Treasuries would no longer be that one safe haven – lend us money and we simply decide we don’t pay it back. Is that a good thing? Opinions vary. It’s complicated.
And that’s why we elect the representatives we do. We don’t get it – it’s really tedious thorny stuff, however important it is. We hire someone to handle it for us. Direct democracy is out of the question.
But that leads to an odd situation – one where we are disengaged, perhaps for good reason, but disengaged nonetheless. And when you leave the hard stuff to others, over and over and over, that does something to you. The important people in the other room, the adults, handle the hard stuff. They always do. And you become a child. Don’t worry about it. The adults will handle it. And we’re all little kids on the outside looking in, if they let us. Sometimes they don’t.
And there you have American political life. The important stuff is done by others. Every two or four years you elect who those others should be, but you’re flying blind. You just hope they do something not too terribly destructive, but what they do is arcane and, if not incomprehensible, well beyond tedious. When Obama ran on one word – Hope – he wasn’t kidding. He just didn’t mean it that way.
So we find ourselves in grudging awe of these people who do what is so complex and tedious – or if not awe, at least we assume they know their stuff – because we don’t know that stuff, and never will. And we think of business people that way – the big guns who run major corporations and giant banks and investment houses. No one really understands what they do. They talk of credit default swaps and derivative hedging and such things. Hell, they must know what they’re doing. And you’re not in any position to ask questions. You don’t even understand the terms they’re using. It’s Greek to you. (Sorry.)
So that makes it hard to evaluate the Financial Times reporting on Jamie Dimon’s latest predictions of doom for Big Finance:
Jamie Dimon, chief executive of JPMorgan Chase, launched a broadside against financial regulation on Wednesday, warning that new capital rules could be “the nail in our coffin for big American banks.” …
Restrictions on debit card fees charged to retailers are also coming under attack in Congress….”It basically penalizes us for having debit cards,” he said. “I think it was very unfairly done in the middle of the night with no facts and analysis whatsoever. This is not the way legislation should be done.”
Attacking another aspect of Dodd-Frank, Mr Dimon said rules requiring companies to put up collateral as they trade derivatives would “damage America.” Gesturing at the chief executive of Caterpillar, Mr Dimon predicted the industrial company would take its derivatives business to Singapore.
Wait – putting up collateral to cover risky trades is standard practice, isn’t it? When you don’t have the funds to cover possible losses you go under – bankrupt. Banks have such rules, and there are the international Basil capital-on-hand standards. If you don’t have to be able to cover your losses in any way, if there are no regulations about that, how is that a nail in the coffin of American banks? This is how we got into this mess, isn’t it? But we’re just kids looking in from the outside. He must know something we don’t. He is the chief executive of JPMorgan Chase after all.
And there’s this:
Mr Dimon’s comments come as Wall Street executives and Republican members of Congress are starting to attack regulation as anger at the financial industry subsides. On Tuesday, Alan Greenspan, the former Federal Reserve chairman, wrote in the Financial Times that the Dodd-Frank financial reforms risked creating “the largest regulatory-induced market distortion since America’s ill-fated imposition of wage and price controls in 1971.”
Spencer Bachus, the Republican chairman of the House financial services committee, has said that regulators are there to “serve” the banks and warned the Treasury not to hurt Goldman Sachs’ shareholders when it writes new rules implementing Dodd-Frank.
Ah, the government exists to serve the banks, not the people who might get screwed by the banks. The government of the people and by the people and for the people stuff was so misleading. But little kids always get things wrong.
Kevin Drum comments on all this:
So Dimon doesn’t like higher capital rules, doesn’t like derivatives regulation, doesn’t like debit card rules, and we already know what the entire industry thinks of the new Consumer Finance Protection Bureau. Long story short, he doesn’t really think the financial industry needs any new regulations at all, thankyouverymuch.
Well, if I were him I suppose I wouldn’t think so either. But guess what? It’s only been two years since the Great Collapse, and finance industry profits have already rebounded to their bubble-era levels. That’s a strong sign that finance industry leverage is also returning to its bubble-era levels, which in turn means the industry is about as dangerous as it’s ever been. And Dodd-Frank is a notably weak piece of regulation, about as weak as any bill could be and still be called regulatory reform in the first place. Wall Street got off easy, and Dimon knows it.
And the Financial Times item suggests that this growing pushback against regulation is coming as “anger at the financial industry subsides.” What anger? Folks have little clue what these guys are talking about ever, although Matthew Yglesias disagees:
Personally, I see absolutely no reason to believe that anger at the financial industry has subsided. The Obama administration was softer on the financial industry than the public wanted, which played into the hands of the other political party. In an ideal world voters would have realized that the other political party wants to be even softer on the financial industry. But in the real world that’s not how it worked. But I think most people are still pretty damn angry at the financial industry and don’t at all agree with Rep Bachus that the proper role of US public policy is to serve the bankers.
But Drum argues that the public was never really all that angry at the financial industry in the first place:
Tea party anger toward TARP has been mainly directed at the government, not at the financial industry. And the occasional protest against AIG bonuses aside, there’s simply never been any real, concerted attack on the financial industry from either left or right. On a scale of 1 to 10, with the healthcare fight rating a 9, I’d say that anger toward banks rates about a 3. That’s why Congress has been able to get away with doing so little about it.
That seems about right. The kids were in the other room, with their toys. This was all boring adult talk, although not to Drum:
Years ago I remember a lot of moderate liberals talking about how the Bush era radicalized them. For me, it was the economic collapse of 2008 that did it. The financial industry almost literally came within a hair’s breadth of destroying the world, but even so it took only a few short months for them to close ranks with Republicans and the rich to prevent anything serious being done to rein them in. Profits are back up, new regulations are barely more than window dressing, nothing was done to help underwater homeowners, bonuses are as obscene as ever, unemployment remains sky high, and the public has somehow been convinced that this was all their own fault – or perhaps the fault of big government, or big deficits, or something. But the finance industry has escaped almost entirely unscathed. It’s mind boggling. If this doesn’t change your view of who really runs the world, I don’t know what would.
Ah, but this is our own entire fault – or perhaps the fault of big government, or big deficits, or something. Kids are easily bamboozled. But Yglesias adds this – “As long as Dimon is whining about this point, we’re doing something right.” That’s not much of a comfort.
And Drum tells another tale:
Back during the brief period when Democrats controlled 60 seats in the Senate, they could have rammed through a bill to grant statehood to Washington DC. This would have guaranteed them two extra Democratic senators and at least one extra Democratic House member. So why didn’t they do it?
He notes that Jonathan Bernstein may have the answer, as this shows a core difference between the parties:
I think perhaps the reason is that for whatever reason, in recent years Republicans have tended to use their best legislative and executive chances to secure long-term electoral advantages, while Democrats have tended to use theirs to enact substantive policy…. The point here isn’t that the Democrats are especially spineless (or that Republicans are especially ruthless) – it’s that they (may) think about, and use, power differently.
We’re long way from Athenian direct democracy, and we choose people to represent who have quite different idea about what the adults in the other room should be doing:
This also explains another of this blog’s hobbyhorses, the GOP certainty that Democrats are going to re-instate the Fairness Doctrine in order to shut down Rush Limbaugh and other conservative radio hosts. If it’s true that conservatives do think as Drum and I have speculated, then their belief is explained because they know that that’s what they would do if they were in a similar situation. And guess what? As soon as they gained a majority in the House (at least this time around), conservatives moved quickly to defund NPR, which they see as the liberal alternative to conservative talk radio.
Drum is just frustrated:
The reason that Democrats don’t do the same thing is because they’re more interested in passing substantive policy, and there’s only so much bandwidth available to them. If you spend all your time on policy, you just don’t have time to do a lot of other stuff.
I’m not sure I buy this entirely, since defunding activities are often pursued by different actors than policy activities. Still, it’s an interesting notion, and one that jibes with something I’ve heard repeatedly on the funding side as well: conservative donors are generally eager to fund overtly political activities, while liberal funders are more interested in funding things they consider worthy endeavors.
We don’t even seem to agree on how things are supposed to work – on what government is for. This makes representative democracy even harder. Not many participate and those who do are on different planets. And the kids look in, if they care to, puzzled by it all.
And they should be puzzled. There is a Republican congressman from Pennsylvania, who is okay with our intervention in Libya, but has reservations – “Where does it stop? Do we go into Africa next? I don’t want to sound callous or cold, but this could go on indefinitely around the world.”
Ah, Libya is in Africa – right there on the map – and Marino is a member of the House Foreign Affairs Committee, and the House subcommittee on issues related to our policy in Africa. Maybe there are some kids on the inside after all.
And there is Louie Gohmert of Texas with this connecting our overall military policy with the Affordable Care Act:
When you find out we’re being sent to Libya to use our treasure and American lives there, maybe there’s intention to so deplete the military that we’re going to need that presidential reserve officer commissioned corps and non-commissioned corps that the president can call up on a moment’s notice involuntarily, according to the Obamacare bill.
Huh? Obama joined a coalition to intervene in Libya so he could deliberately undermine the military, creating the need for a separate, secret presidential army, which is hidden in the health reform law. Who knew?
The limited mission in Libya does not seem to be “depleting the military” – and there’s no provision creating a secret army in the Affordable Care Act, though it did create a health service reserve corps – that could be called upon in the event of a crisis. That’s not a secret army – that’s calling on army medics to help out. But whatever.
Yes, one of the necessary conditions for a democracy to work is a critical mass of policy wonks and political junkies – you need an informed public who understand what the issues are, and, structurally, how power is amassed and wielded, so everyone can agree, more or less, on what the current rules should be, and of course on which policies should be pursued and which dismissed as dangerous nonsense. And we’re as far from that as we’ve ever been. We seem to like being the little kids on the outside looking in. And maybe you don’t want to look in.