A week after Congress passed the Emergency Economic Stabilization Act of 2008 (otherwise known as Massive Bank Bailout Number One), noted journalist and polemicist Christopher Hitchens penned a scathing indictment of the measure in which he lambasted the contemptible state of America’s government and economy. Writing for Vanity Fair, he asserted that the financial crisis and the government’s response to it more resembled the kind of phenomenon one would expect to see in Zimbabwe, Venezuela, or Equatorial Guinea. The Land of the Free and Home of the Brave, Hitchens observed, was beginning to look eerily like a banana republic:
“[S]ocialism for the rich and free enterprise for the rest.'” I have heard arguments about whether it was Milton Friedman or Gore Vidal who first came up with this apt summary of a collusion between the overweening state and certain favored monopolistic concerns, whereby the profits can be privatized and the debts conveniently socialized, but another term for the same system would be ‘banana republic.’ What are the main principles of a banana republic? A very salient one might be that it has a paper currency which is an international laughingstock: a definition that would immediately qualify today’s United States of America. . . . But still, the chief principle of banana-ism is that of kleptocracy, whereby those in positions of influence use their time in office to maximize their own gains, always ensuring that any shortfall is made up by those unfortunates whose daily life involves earning money rather than making it. At all costs, therefore, the one principle that must not operate is the principle of accountability.
Mr. Hitchens’ analogy was spot on two years ago, and couldn’t be more accurate today. There is a growing impression that Americans’ voices are no longer being heard in Washington, and haven’t been for years now. Instead, our representatives – on the Right and on the Left – increasingly take their marching orders from corporate benefactors who use their deep pockets to gain access and shape policy. Because it has been in their interest to do so, corporations have made a science out of manipulating the system to make it more amenable to their ends – and self-interested politicians have been only too happy to accommodate them. The unavoidable result of such an incestuous union is a dearth of transparency, integrity, and accountability, and as Hitchens’ points out, the people are ultimately the ones who pay the price – most often with their tax dollars, and sometimes with their very lives.
Why, for example, did Uncle Sam feel the need to quadruple our deficit and add $3 trillion to our debt in order to bailout Wall Street? It was, we are told, because the firms in question were firms “too big to fail.” To allow them to go bankrupt would have precipitated a global economic collapse of unprecedented proportions. Perhaps this is true, but the world would have recovered. America would have recovered. And the good thing about such a recovery, slow and painful as it would have been, is that it would have been authentic. It would have been a legitimate recovery. Instead, the powers-that-be in Washington decided it was necessary to artificially “stimulate” a recovery using a clever combination of debt and what amounts to Monopoly money.
Not surprisingly, this has been a win-win situation for government, and not too bad a deal for the big guys on Wall Street: Government’s role in the financial sector has grown exponentially and favored firms have been spared the consequences of their recklessness and greed – all on the taxpayers’ dime. It hardly comes as a surprise that many of the bailout’s key architects were former industry insiders, or have gone on to work for the industry in the wake of the financial crisis.
If there is a revolving door of money and power between Washington and Wall Street, the same might be said of the relationship between Washington and many other powerful corporate industries. We all recall the mining disaster in Montcoal, West Virginia that took the lives of 29 men, devastating a community and casting a spotlight on the negligence of the company and the inefficiency of the regulatory agency charged with ensuring safety compliance. Hardly had this tragic accident faded in the nation’s memory when an explosion rocked the Deepwater Horizon oil rig off the coast of Louisiana, killing 11 and sparking the largest industrial disaster in U.S. history. Once again, it was soon revealed that major safety lapses had occurred – lapses that should have been noticed by government regulators but had gone undocumented and uncorrected thanks to Uncle Sam’s sticky ties to British Petroleum, from the low level rig inspectors all the way to the Oval Office.
Our government never hesitates to seize upon a crisis, be it economic or otherwise, as an opportunity to conclude that the free market has failed us, and that only the government has the power and resources to set things right. Yet, time and again, when government has been given the reins of responsibility and oversight, it has cozied up to the powerful interests it is supposed to regulate and left the rest of America out in the cold.
We are, therefore, left with these questions: Is Hitchens right? Have we traded in what was once our great “meritocracy’ for what he describes as a “kleptocracy?” Has our government shelved the principle of equal justice for all” in favor of programs that provides preferences for the highest bidder? Is our constitutional republic in danger of becoming a banana republic?
We had better confront the answers to these questions soon, or we will soon not recognize what was once our great country.