Greider Slams U.S. Financial Policy

Thursday night at UCSB’s Campbell Hall, journalist William Greider discussed his new book, Come Home, America: The Rise and Fall (and Redeeming Promise) of Our Country, and raised some major questions about the American economy and how it’s being managed. He explored the ways in which the government falls short of its obligation to bulk up America’s democratic institutions and suggested that the campaign for change must work from the bottom-up rather than be initiated by high-profile decision-makers.

Greider, who said that he’s been called an “unlicensed crackpot” by leading economists, made some grave observations about the distribution of power in this country, but was nonetheless optimistic that change is possible.

“There are alternatives,” he said, “and they’re not crackpot!”

Greider explored the limits of the American system and suggested that it’s time for our country to acknowledge those limits. The crux of Greider’s talk was this: “Number one is over, not coming back. That’s not yet recognized by most Americans and certainly not by the people in power, but it will be.”

He provided examples of the weaknesses in the American super-system: the pressures of oil and environmental degradation on the American consumer lifestyle, an economy “gravely weakened by globalization,” a desperate resort to militaristic action, and a “dysfunctional” democracy. This last point he repeated time and again. It’s a problem which he said “becomes painfully clear to us now in crisis, as the political system rushes for hasty solutions,” rendering the American people tangential to the decision-making process.

Greider made some interesting comparisons between the present crisis and recurring pre-World War II depressions. He argued that, decades ago, the government’s response to financial breakdown was inadequate. He said he was concerned that the current administration has, in a similar fashion, shied away from effecting fundamental change.

Greider explored the “cozy relationship” between the American government and major banking corporations, and suggested that this relationship is largely responsible for the failed state of American democracy. “Just as bankers designed the Federal Reserve as a solution to the panics and recurring depressions 100 years ago, Wall Street and these same banking firms are now advancing the government’s solution for our present crisis,” he said.

In essence, Greider argued, the banks are simply transferring their losses to the American taxpayer. Today, American finance is no different than what it was in decades previous, he said: “It’s just about who has power and who doesn’t.”

He argued that finance giants like JP Morgan-Chase and Goldman Sachs essentially dictate government policy. “This is not the way a government is supposed to act with the public’s money,” he said.

Just as past governments resorted to the printing of money in response to financial breakdown, the Obama administration is printing “trillions of dollars out of thin air,” he said. These are dollars, Greider argued, that will save failed banks, and that won’t be used for public purposes. And that’s what’s wrong with the system. In the fed’s defense, he said, “Reserve officials are not evil people. They are experts and they are ‘technocratically’ conscientious, but given the culture of the institution, they are utterly oblivious to democratic institutions.” They assume “people can’t understand,” so they “don’t even try to explain,” he said. And, not surprisingly, people are intimidated.

Greider called on his audience to “break through the intimidation and the deference” in a way that emulates the efforts of the pre-World War II agrarian populist movements.

Similar to the farmers who challenged the government decades ago, today’s citizenry is “understandably, justifiably angry,” Greider said. “It just feels wrong to see government rushing with its unlimited assets to the banks in the name of financial stability, after these banks are the ones that destabilized the financial system.”

He urged America to channel its anger into productive protest. For Greider, fundamental change will be contingent upon public pressure.

“Barack Obama is aligned with the Wall Street plan. He’s put some bells and whistles on it but it’s essentially the same plan that Henry Paulson proposed. I think that’s too bad, I don’t think it’s the end of the story. Obama and the Democratic Party need to understand that they’re putting themselves on the wrong side of history. If they succeed in the short term, they’re going to fail in the long run. People can save it, if they’re willing to push the president beyond where he intended to go,” he said.

Greider suggested a few potential solutions to the problem: he advocated the democratization of the fed, thereby making the central bank accountable to elected politicians. He argued for the creation of specialized financial firms to produce venture capital “for the things we know we need, like innovative, small, ecological, inventive firms,” he said.

He pushed for “euthanasia” for the banks, and for the restructuring of the American banking system, in order to align American finance with democratic ideals.

But ultimately, he argued, change has to start with the people. It’s time for us to “step up our inherent power as citizens,” he said. “And that is the syllogism of democracy. You will have power if you believe you have power.” And that was his basic, underlying message: It’s time for us to believe we have power, to find inspiration in the courage of the 20th century agrarian movement and to pressure our government to resuscitate and preserve American democracy.