On Thu Apr 3, Seth Ackerman wrote:
> This is a rare moment - the whole country is paying attention to
> national economic policy at the very moment an act of supreme bourgeois
> hypocrisy is about to be carried out. It should not go to waste. If the
> powers that be desperately want a bailout quickly and have to go
> anxiously hat in hand to Congress to get one, the proper attitude is to
> yell about the hypocrisy of bailouts for bankers and austerity for
> workers. That's the only possible way to force them to give something in
> return - you have to scare them into thinking they might not get it if
> they don't make it fairer. If you don't do that you're not even trying.
The more I think about this, the more I think this is not right. I'm all for this principle of political opportunism in general. But I think here it would be misapplied.
I mean, what would be the best thing that progressive forces could get in return for this bailout? Besides regulation (which is more about efficient management of the economy than anything progressive) I think you yourself put clearly: we want much higher taxes on the rich. But you don't want them temporarily -- you want them permanently. And you don't just want them on the finance houses that are saved -- you want them on all the rich, all of whom park their money in stocks and bonds and own a stunningly disproportionate amount of them.
So if we're dreaming, what you want it to change the tax discourse permanently. And for that, you want to say this is not a temporary thing that we'll give or not give you. You want to say instead: this is the way capitalism works -- at the end of the bull candy mountain is always a bailout that costs hundreds of billions of dollars and that bails out the rich more than it bails everyone else because the rich own most of the stock and bonds, which is what the finance system is made of. It's always been that way and it'll always be that way. And we always have to do it because otherwise we'll get a depression. We are forced to save the rich in order to save ourselves because that's how capitalism works.
And that why the rich ought to pay more -- now, in the future and forever. They profit more from capitalism, both when it's going up and when it's going down.
And what you want to do is burn this common sense. So that when people say Why should the rich pay a higher percentage of the earnings? you finally have a short answer. Because they get more. Because every time there's a crisis -- and they are periodic, it's in the nature of the beast -- and we have to prop up the financial system, their stocks and bonds get propped up with tax dollars. So it's only right they pay a lot more. They cost a lot more and they get a lot more.
And if you want a good populist gesture, I would think the first one should be to reintroduce the bill on hedge fund manager taxes and not only equalize them but slap windfall taxes on them. Which oddly no one has.
The other problem with this "threaten them with not getting it, until we get something too" is that on current trends, it looks like "what you'll get back" is billions to reinflate the housing bubble rather than any form of economic justice.
In fact, one thing that is very odd about all this "bailout for the bankers, but not for the middle classes" talk is how it counts things up. Back-up guarantees by the Fed is not like we gave them $30 billion dollars in cash. It could turn out to be zero dollars, like the loan guarantees we gave to Mexico. And even if does costs money, it's not clear any of that would come out of taxes (as opposed to the Fed's operating budget).
But if you do want to count guarantees and risk like that as if it was money, then we've already give 7 times more to middle class homeowners by making it so that Fannie and Freddie can take $200 billion more of mortgage securities onto their books. If one is a bailout, so is the other. And it's exactly the kind of bailout you don't want -- the kind that doesn't hurt bankers a bit, and that doesn't restructure anything in the interests of greater justice or prudence.
And it seems to me, that's precisely the kind of deal that this kind of rhetoric is fueling.
Where on the contrary, Doug's very radical proposal for a large scale limited equity housing cooperative cooperation (which IIRC is very similar to something Dean Baker once proposed) which would address the real justice issues (the poor people in subprime who got sluiced), and create systemic change, isn't lofted by this quid pro quo rhetoric. That would require a profound change in worldview -- the kind of thing that short moments of political opportunism are unfortunately completely unequipped to deliver.
Michael