by Linda Beale
More on Occupy Wall Street–Stiglitz and Madrick add their voices
Jim Swan, the Not-an-economist blogger who writes about “economics and the economy in the wake of the financial crisis”, is definitely a supporter of the Occupy Wall Street protest movement.
In an earlier post, I noted the addition of labor concerns to the voices supporting the movement–important, because so much of the impact of financialization of the economy has been to create a two-tiered social structure of privileged banker/investor/managers versus marginalized worker. Decades-long actions have undermined unionization–by limiting secondary strikes, by empowering employers to dominate workplace discussions, by weakly enforcing labor laws, by disempowering workers from forming unions, and now by the right’s efforts in the states to gut collective bargaining by public workers, in the process using a divisive technique of pitting private workers whose efforts to unionize have been hardest hit by the weakening of labor protections against public workers whose unions have given them more ability to claim decent wages. As a result, the vast majority of Americans find themselves with declining standards of living as wages stagnate or decline, while heads of big business rake in a bigger and bigger share no matter how the company actually fares, resulting in ridiculous golden parachutes for failed executives.
Notaneconomist notes the importance of progressive economic thinkers paying attention to the Occupy Wall Street group: see Occupy Wall Street? It’s About Time!, providing video and transcript links covering progressive economist Joe Stiglitz and economic historian Jeff Madrick addressing the group October 2. Part of the post follows.
Two excerpts from the Wall Street event (October 2):
Stiglitz: Our financial markets have an important role to play. They’re supposed to allocate capital and manage risk, but they’ve misallocated capital and created risk. We are bearing the cost of their misdeeds. There’s a system where we’ve socialized losses and privatized gains. That’s not capitalism! That’s not a market economy. That’s a distorted economy, and if we continue with that, we won’t succeed in growing, and we won’t succeed in creating a just society….
Madrick: The FBI actually told the powers that be that there was an epidemic of fraud in 2004 in the mortgage market. Washington and the Federal Reserve had the power to do something about that. They did not. The more bad mortgages went on, the predatory lending got worse, and the powers that be—in particular and let me name names, Alan Greenspan, the Chairman of the Federal Reserve—was able to retire in glory. Is there something with this picture? There sure is…
My only question is why the demonstrations didn’t happen sooner. Perhaps it has taken this long for it all to sink in. Not only did Wall Street recklessness create the crisis as government regulators looked on, but now bankers are back playing the same game and complaining of government interference, with no acknowledgment of the bailout that pulled them back from the brink.
Speaking of the bankers lack of acknowledgement of the bailout, Swan goes to NPR’s interview a year ago with Wall Street bar patrons (an investment banker, an institutional investor, a credit rating agency quant). That’s definitely worth reading in full at NotanEconomist (linked again in case you want to), but here’s the key part. After the interviewer suggests that the interviewees should acknowledge that all three benefited from the massive government intervention to protect the financial system, one of them says that the reason he still had a job was “because I’m a smart person”, not because Wall Street was bailed out. They view the fact that the industry was bailed out as irrelevant to their situation–they just used their smarts to take advantage of the situation and land well-situated.
originally published at ataxingmatter