Here We Go Again
Though Liaquat Ahamed's book focuses on individuals, it is really about the economic and ideological orthodoxies that drove them in a particular period. Even the best and brightest in the world of finance often could not see beyond a certain set of assumptions. He focuses on Benjamin Strong of the Federal Reserve Bank of New York, Emile Moreau of the Banque de France, Hjalmar Schact of the Reichsbank and Montagu Norman of the Bank of England.
The well-written history explores how all of these individuals insisted that the gold standard was essential to economic stability at a time that was not the best course of action. Their world view caused them to take and to promote monetary actions that destroyed their economies, and severely impacted German wartime reparations .
It is easy to see how a comparable book may soon be written about the individuals who shaped the political economy during the 1990s, the glory days of globalization and free market economics, when individuals such as Lawrence Summers and Robert Rubin ruled the day and could not seem to do any wrong in Washington. There were vigorous debates between Republicans and Democrats in the 1990s, just as there were in the 1920s, but these debates were contained with certain parameters. Now politicians are living with the effects of the economy they created, and many Americans will be paying the price for their decisions for decades to come.
"...1990s, the glory days of globalization and free market economics, when individuals such as Lawrence Summers and Robert Rubin ruled the day ..."
It is good to remember that Lawrence Summers still rules the day. Has he learned to think outside the box? Our futures may depend on the answer to that question.
April 14, 2009 12:38 PM | Reply | Permalink
My, my, let's just skip over the radical GOP contributions to this mix, shall we? What exactly is the point of your emphasis on the Clinton administration to the exclusion of any other political party or administration? Is this a last ditch effort to save the reputation of the GOP? (Assuming that is even possible which I really doubt.)
April 14, 2009 12:50 PM | Reply | Permalink
This goes back to Raygun... Clinton played along, too... But let's remember that 20 of the last 28 years had a Repug in the WH...
April 14, 2009 12:59 PM | Reply | Permalink
Except that Clinton signed on to the Gramm-Lynch-Bliley Act and the CFMA, both of which were supported by Summers and Rubin, in late 1999 and in 2000 -- that is, when it was philosophy driving the decision and not politics (lame duck and all).*
* Unless, of course, Slick Willy was looking for campaign funds from Wall Street to support his wife's bid for the Senate.
April 14, 2009 1:37 PM | Reply | Permalink
Keith Olbermann really lays out a very nice explanation of what's been going on...
If you go to YouTube and search
"Countdown With Keith Olbermann - The Blame Game [3-9-09]"
you will see a terrific video that explains just how this whole situation came about... Pay attention to the end where some of Obama's people are mentioned...
It's complicated and ugly... and it certainly IS NOT the fault of the average American indivudual.
http://www.youtube.com/watch?v=Z5j4wWrRkK0
April 14, 2009 12:53 PM | Reply | Permalink
In our republic, I suspect our citizens who could vote in--and out--particular rascals have to shoulder blame for a substantial, if not major, portion of the blame. It may be uncomfortable to face mistakes of this magnitude but the failure of our citizenry was certainly evident in these decades.
There really is no excuse. The mantra of "no taxes" and "let government get out of the way" was what our citizens supported. This is exactly where it led. And it may have been supported by the GOP philosophy but it certainly had its adherents in the DLC arm of the Democratic Party which held sway for some time.
The real question is whether Obama shares the extreme free market philosophy and whether or not our current Treasury folks have either "learned their lessons" (as Greenspan has said about the changes he has had to make in his philosophy) or share Obama's philosophy of regulated (perhaps re-regulated) capitalism.
And, yet again, Congress (particularly the Senate where good bills go to die) gets off scot-free. And the citizens who elected our Congress critters.
April 14, 2009 2:39 PM | Reply | Permalink
It may be uncomfortable to face mistakes of this magnitude but the failure of our citizenry was certainly evident in these decades.
True dat.
There's certainly going to be problems when only half the citizens are able to vote in the first place... and only half of them actually do... and I'd be shocked to find 10% "informed".
The vast majority just have some TeeVee on in the background... they don't give a damn about any of it... they just vote however the teevee told them too 6 hours ago...
April 14, 2009 3:26 PM | Reply | Permalink
Why vote!
As respects banking and finance issues, one's vote doesn't make a dime's worth of difference. See, above.
April 14, 2009 4:21 PM | Reply | Permalink
Why vote!
...or do you mean: Why vote?
I assume you were asking a rhetorical.
In either case... IF the citizens of this country took their civic duty seriously. IF, say, 80 - 85% of all eligible voters took the time to educate themselves and show up to vote... IF those same 80 - 85% remained active and contacted their representatives regularly and often (as we are SUPPOSED to do...)
If those things happened, then, in response to your rhetorical, the answer would be obvious.
Those bankers, business persons, and congress persons would have behaved much differently. Those problems would have never arisen in the first place.
But there I go again... head in the clouds.
WHY VOTE??? Are you serious?
April 14, 2009 8:46 PM | Reply | Permalink
It is absolutely inconceivable to me that someone as "smart" as Summers could think that allowing the banks to combine ultra-risky activities (e.g., derivatives trading) and traditional banking functions was a good idea. Glass-Steagall was passed specifically to prevent this, as it was the primary reason for many bank failures in the Great Depression. It was obvious to me at the time (and I am not an economist, as I have no doubt demonstrated in my comments here) that this deregulation could cause the same type of collapse in the 2000's as occurred in 1929.
I can only assume that Clinton was as in thrall to Summers' "brilliance" on matters economic as Obama seem to be today. If the economy collapses, Clinton, Rubin, Summers and Obama will have to bear primary responsibility.
BTW, Simon Johnson is on Fresh Air today.
April 15, 2009 12:14 PM | Reply | Permalink
Individual action like voting create emergent properties. It's a good thing that much of the electorate doesn't vote. They can't form enough conviction to do it, so they shouldn't. At least they're not acting on insufficient information to make a choice, like we do.
If you want folks to be politically active then you have to give them time and resources to do it. On the bright side, a lot of folks are now unemployed.
April 15, 2009 12:42 AM | Reply | Permalink
The voter turnout numbers need to be accompanied with a huge pile of salt. As just one example, I have encountered the same apartment with five voters--and only one living there. The voter rolls don't remove folks quickly so they can stack up. It plays havoc with the statistics.
And let's not be the elitist left who meets the elitist right with nasty attitudes toward the citizenry. It's annoying.
For those of you who want a more informed citizenry then put your time where your attitude is and become a leader in your neck of the woods. Lead so your neighbors are better informed about the issues and the people running.
April 15, 2009 2:44 AM | Reply | Permalink