Skip to main content

Treasury Secretary Tim Geithner stands at President Barack Obama's side along with White House Chief of Staff Jack Lew as President Obama nominates Lew to be his new Treasury Secretary.
“As a reward for a quarter-century of patiently fulfilling their duties, career bureaucrats may expect a second career as . . . an executive of a large firm or bank. Their delayed rewards as amakudari (“descent from heaven”) bureaucrats usually include at least a doubling of income and sometimes much influence and handsome fringe benefits.”

Karel van Wolferen
The Enigma of Japanese Power
1989

A clinical dissection of the Soviet system, in which a group of managers and bureaucrats . . . are engaged in ceaseless political maneuvering among themselves while maintaining total power, as a privileged class, over all the others.

John C. Campbell
Review of Nomenklatura: The Soviet Ruling Class, by Michael Voslensky
Foreign Affairs
Winter 1984/85

(Continue reading below the fold.)

I made a dumb Twitter mistake the other day, but one that led me to an interesting look at the way our ruling elites operate here in America—especially those that, for one reason or another, identify themselves with the Democratic Party.

The mistake was this: After hearing President Obama was about to nominate White House Chief of Staff Jack Lew to be the next treasury secretary, replacing Tim Geithner (Wall Street’s $800 billion man), I tweeted:

POTUS unaware of law Treasury Sec must be Wall Street plutocrat. Wants experienced civil servant. GOP knows they're losers—like P. Volcker
The problem, as others have learned to their sorrow, is that it’s way too easy to pull the trigger on a tweet without first making sure that a.) you don’t sound like a complete idiot, and b.) you’re not being incredibly obnoxious.

Call it the Donald Trump Syndrome.

Fortunately, in my case I think I was only guilt of a.)—sounding like an complete idiot. I was only trying to poke some quick fun at the frantic attempts of Republican critics to think up plausible excuses (other than pure Obama Derangement Syndrome) for opposing Lew, while at the same time contrasting his nomination with the more recent custom of naming retired Wall Street gazillionaires (Robert Rubin, Hank Paulson, Nick Brady, Donald Regan) to be the federal government’s chief ambassador to Wall Street.

Which, when you think about it, is like asking a successful used car salesman to negotiate a car deal for you—with another salesman at the same dealer.

But, in my quest for instant Twitter gratification, I overlooked a couple of things. One is that the current treasury secretary is not, strictly speaking, a plutocrat. In fact Geithner’s career actually looks more like Volcker’s than any recent treasury secretary I can recall.

After working a few years at Kissinger & Associates (boo hiss), Geithner entered government (Treasury) as a civil servant, rose quickly under Clinton, then moved to the IMF. He became president of the New York Fed in 2003, making him a senior member of Time magazine’s “Committee to Save the World”—with special emphasis on that part of the world that trades financial assets in lower Manhattan.

These were all powerful, high-paying jobs, but not the kind that make you insanely rich, at least not right away. (Current salary of New York Fed president: $410,000—i.e., just barely inside Obama’s new top tax bracket).  So say what you will about Tim Geithner  (and from a progressive point of view, not much of it is good), at least he hasn’t been directly on the payroll of Greed Inc.—at least not yet.

My other mistake was thinking the same could be said of Jack Lew.

Filling the Tank at Citigroup

My initial perception, after a quick (way too quick) Wikipedia check, was that Lew had spent his entire career in government—first as a House staffer, then in Boston city government, and then the Clinton White House—before taking an admin/teaching post at NYU, then returning to government under Obama.    

What I didn’t notice in my haste is that along the way Lew made a quick stop at Citigroup Alternative Investments (CAI)—the hedge fund arm of the world’s ex-largest bank, which, as we now realize, was actually the financial equivalent of the Titanic, the Lusitania, and the Hindenburg, all folded into one exquisitely mismanaged holding company.

Lew was only at Citi for about a year and a half—but it was the year and half leading up to the 2008 financial crash, which also totaled CAI. When Lew walked away from the wreckage, he managed to take his $1.1 million salary and a $900,000 bonus with him—even as Citigroup was becoming a poster child for the Treasury’s new AFDC (Aid to Financially Dependent Corporations) program.

The gory details of how Lew earned his money at Citi (by shorting the housing market, in cahoots with a hedge fund manager who helped Goldman Sachs do the same at the expense of its long clients) have already been well reported, so I won’t reexamine the entrails here.

I’m more interested in what Lew’s brief stay at Citigroup has to say about the modern Democratic Party nomenklatura—the political technocrats who (when Democrat politicians are in power) staff the government, and who in many ways have become more powerful than the elected officials they theoretically work for.

The “Natural” Party of Government and Its Discontents

I’m focusing on the Democrats here mainly because they are the party in power, and also because President Obama seems to have a particular fondness for the permanent government types—even more than the Technocrat in Chief, Bill Clinton, once did.  

But it’s also true that the GOP equivalent has mutated so much in recent years as to become almost unrecognizable.

The old GOP mandarins who once moved easily between senior cabinet posts and corporate CEO jobs—people like Cap Weinberger, Paul O’Neill or even Dick Cheney—are all gone now, although Condi Rice (late of both the State Department and the Chevron board of directors) kind of keeps up the tradition.

The appointees who now staff Republican administrations are much more likely to rotate to and from Congress and the conservative think tanks, rather than the corporations. In any case, their role isn’t so much to run the government as to occupy it and, if possible, undermine it—as we learned during the reign of the “Mayberry Machiavellis” of the Bush II years. This makes them a poor fit for a permanent, technocratic ruling caste.

The modern Democrats, on the other hand, have emerged as the natural party of government  par excellence—policy wonks and pragmatic problem solvers, for whom “reform” means making the existing dysfunctional system somewhat less dysfunctional, rather than trying to overhaul it or tear it down completely.

As a result, Democratic political appointees now tend to blend fairly seamlessly into the career civil service, playing a detailed role not just in policy making but in policy implementation, and also allowing some of the careerists to rise to the highest ranks—as John Brennan, the real-life version of the torture bureaucrat played by Michael Palin in the movie Brazil, is about to demonstrate at the CIA.

Thus, the nomenklatura—the Soviet term for the cadre of trusted party figures from which top-level government officials were drawn.

Pie Below the Sky

Every country, not just communist ones, has its nomenklatura. But how those elites operate, and how they relate to other bureaucratic power centers—large corporate and financial ones in particular—varies considerably.

What’s most relevant at the moment are the variations in the way the nomenklature who run the government are cut a share of the financial pie by the elites in control of the commanding heights of the economy—which, in a modern capitalist state, means the major commercial and investment banks.

Perhaps the most famous example is in Japan, where the professional civil service reigns, if not quite supreme, then at least as first among equals in a power structure that often defies easy categorization or analysis (the “enigma” of van Wolferen’s title).

In Japan’s system, senior civil servants—especially the ones who run the hugely powerful Ministry of Finance—are expected to remain at their government posts until retirement age, at which point they “descend from heaven” and go to work in the corporate sector.

In some cases, these jobs are just short-term sinecures; not much more than the equivalent of the proverbial handshake and a gold watch, but paid for by private companies, not the taxpayers.

However, for the senior MOF guys (and they’re still almost always guys), the jobs can be both influential and lucrative. They become their bank’s ambassador to the MOF—or, more accurately, the MOF’s resident agent inside their bank.  By Japanese standards, if not U.S. ones, they can accumulate some serious wealth before retiring for good or re-ascending to heaven, this time the real one. (Assuming that’s where dead financial bureaucrats go).

The key point is that in Japan, the revolving door generally doesn’t revolve: It only works one way, and can be used only once. A MOF man who tried to bail on his job in mid-career to go cash in at a private firm probably wouldn’t be hired—or, if he was, would be viewed with contempt by his former colleagues, and almost certainly would never return to government—not even as a political appointee. He’d be blackballed by the bureaucrats.

How to Succeed in Investment Banking Without Really Trying

Lew’s interlude at Citigroup shows just how different the unwritten rules are here.  Senior federal officials move easily (and constantly) between Washington and Wall Street, basically using the banks as quick personal wealth pit stops before taking another lap around the bureaucratic track.

Or the political one. Rahm Emanuel is an example of an alternative career path now available to the nomenklatura, in which staff jobs (several of them involving fundraising from large financial companies) led to a job at one of those firms, which brought wealth, which eventually helped launch the wealth acquirer into elected office.

What these guys do to earn all that wealth is anyone’s guess. There’s certainly nothing in Jack Lew’s career that indicates any intimate familiarity with hedge funds before he joined Citigroup. Likewise, collecting campaign cash from Wasserstein Perella, as Rahm did, doesn’t seem like a particularly strong qualification for working there—especially for a guy whose previous private-sector experience consisted mainly of getting his middle finger caught in a meat slicer.

I'm sure there are more than a few retired Japanese bureaucrats who don't do much for their money either, except get old and die. But U.S. corporations aren’t generally known for paying people to do that. This naturally feeds the suspicion that our ex-officials are selling services to be rendered later, after the revolving door has turned them back into officials again.

It’s probably not quite that blatant (although who knows?) But, even being charitable, it’s a gangrenous conflict of interest, one which makes it pretty much impossible to believe that a Treasury Secretary Jack Lew would always have the best interests of the American people in mind when he picks up the phone and talks to the Wall Street people—his once and future employers.

American Exceptionalism in Action  

Why our system of institutionalized corruption is organized so differently than Japan’s probably has dozens of complex historical, cultural, political reasons—and, for all I know, dietary ones as well.

I’m sure part of it has to do with the weakness of the U.S. public service tradition (“mandarin” not being a term most Americans would see as a compliment) and the steady blurring of the line between the career civil service and the political appointees. No matter how public spirited, the latter group inevitably has to look ahead to next presidential election, which may also mean the next job.

That doesn’t mean they’re always bad people—far from it. Some of the ones I knew back in the day told me the hard part wasn’t slaving away in low-paying political jobs with crazy hours for four or eight years, it was being bored out of their skulls the rest of the time earning six- or seven-figure salaries in the private sector. They want to serve their country, they want to do something that isn’t just about making money.

But they also want, or maybe feel they deserve, those salaries—plus the bonuses, the stock options, the deferred comp, the paid directorships: all the generous goodies that corporate America, especially financial America, bestows on its favorite children.

So there’s the difference: In some countries, like Japan, being in the nomenklatura means you get a powerful job in the government, and, if you luck out and reach the very top, maybe a high-paying job at a bank as your retirement bonus. In America, you get both, and you get them quickly—one right after the other.

At least in Japan the line between serving the state and serving the corporation is still relatively clear (which is ironic, given all the jokes about “Japan Inc.”). It’s also clear which is viewed as the higher calling: Nobody “ascends” from the MOF to a corner suite at Sumitomo Bank.

Here, by contrast, the distinction between the permanent government and the permanent financial oligopoly has pretty much disappeared in the constant coming and going: Jack Lew goes from Citigroup to State, then to OMB to replace Peter Orszag, who goes to Citigroup, then to the White House to replace Chief of Staff Bill Dailey, who came from a vice chairmanship at J.P. Morgan Chase—and so on. And that so on goes on fairly deep into the bowels of the federal bureaucracy.

Fighting Corruption, One $20 Gift at a Time

This system has made a joke (a bad one) out of the various ethics rules that supposedly restrict executive branch officials from accepting income from outside interests, or acting on matters that affect their personal financial interests—their current interests.

When the payoff has already been made—and another one awaits at the end of your current tour of duty—such temporal distinctions become almost irrelevant: It’s just a matter of what discount rate to use in calculating the present value of your future bribes. Even a lawyer bureaucrat turned investment banker can do that—or hire an accountant to do it for them.

But, not to worry: The Obama Administration is on the case. It has reacted to the threat of revolving door corruption by closing the loophole that once allowed career employees to accept gifts from lobbyists worth up to $20—or $50 per calendar year. Also:

Federal employees would no longer be able to go to functions sponsored by lobbying groups even if they are widely attended gatherings. They also would no longer be able to accept social invitations from lobbyists or accept meals and entertainment provided overseas by lobbyists.
So there. Change you can believe in, baby.

Given the perennial focus on congressional corruption, it seems odd that the American financial nomenklatura now enjoys far greater career mobility (i.e. the ability to make multiple pit stops at the Wall Street money machine) than most elected politicians do.

Yes, ex-congressmen can hire themselves out as lobbyists—and maybe even make big money at it, although the market is awfully crowded. But how many do you know who have retired, cashed in, then come back for another try at elected office? None, at least that I know of, and for the obvious reason: The voters wouldn’t have it, or them.

But the financial nomenklatura rides above such petty considerations, unless, like Raum, they’ve decided to switch from the bureaucratic to the political track. For the political appointee, the right to rule—and feed—and rule—and feed again—rests on their alleged indispensability to the workings of the modern post-industrial state.  

A Liberal Interpretation of Motives

And maybe that’s the real problem: The arrogance and unconscious (or conscious) sense of entitlement that stems from being part of the “meritocracy”—elite products of elite schools, first in their class, the doctorates, key internships, clerkships, fellowships, etc.

When that’s your personal history, I guess (I’ll never know) it must be easy to feel you deserve to have it all, without guilt or even reflection. I suppose that’s even more true if your politics are liberal, and you can persuade yourself that just because you care about the poor, and want to help them, and want the government to help them, that doesn’t mean you have to be one of them—or even part of the dwindling middle class.

Or, as the radical folk singer Phil Ochs once put it:

[Liberals are] an outspoken group on many subjects—ten degrees to the left of center in good times, ten degrees to the right of center if it affects them personally. Here, then, is a lesson in safe logic.
Love me, love me, love me: I’m a liberal—a liberal bureaucrat turned banker turned bureaucrat.

The problem, of course, is that when your bread has been buttered by a particular knife (and will be buttered again by it soon) you have a strong incentive not to ask where the butter came from, or whether that same knife might also have been used to steal it.

Sure, this is a problem everywhere—not least in Japan, where generations of MOF bureaucrats have helped the big banks squeeze depositors and consumer borrowers in order to provide cheap financing to Japanese corporations. I’m sure that never hurt their personal financial prospects when the time came to descend from heaven.

But the American nomenklatura has taken ethical obliviousness to all-new heights—to the point where, when Jack Lew opined at his OMB confirmation hearings that he really didn’t think financial deregulation had anything to do with the financial crisis, he might even have believed it.

One can only wonder what Lew’s old college advisor, Paul Wellstone, would have thought about that one.

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

    •  Let Me Rephrase (29+ / 0-)

      I'm really skeptical that one of Rubin's circle are capable of making the right decisions for regular working people in this country. Rubin, Summers and Geithner have failed ordinary folks again and again and again. Why should I think that Jack Lew is any different?

      "I'll believe that corporations are people when I see Rick Perry execute one."

      by bink on Sun Jan 20, 2013 at 10:09:58 AM PST

      [ Parent ]

      •  Well, somewhat more humility for one thing. (3+ / 0-)

        Of course, Lew is not without ego. No one who's served in Washington is lacks ego or ambition. But he does not stride in with the out-sized - and, in my view, unwarranted - ego of a Larry Summers, who brooked no other opinions, no matter how far out he got. And Rubin, Co-Chairman and a Board member of Goldman Sachs and deeply-planted Wall Street personage, was surrounded by Romney-worthy sycophants pretty much throughout his career. Geithner was and is Geithner. Lew isn't any of those.

        Lew is a Federal finance, budget and management guy. Between various government gigs, he headed up an investment group within Citicorp for about 18 months or so, without which he'd have no Wall Street credentials whatsoever.

        As liberals in 2013, which expertise - Federal budgets, economics and public finance ... or all Wall Street and the markets - would we most like a Secretary of the Treasury to have?
        One of the good things that can be said about Jack Lew is that he seems to have incurred the displeasure, if not the enmity, of both sides of the political spectrum.

        Now, we liberals are known (correctly, let's face it!) for cannibalizing our friends. We nip at Lew for being against grad student unionization within academia and for making some money in his Citicorp tenure. He was unwilling to lay major blame (not the "proximate cause") for the financial/economic crisis on bank deregulation. Of course, deregulation was ill-conceived but every fair observer says there were a myriad of causes and effects in the 2007-08 debacle.

        Lew supported President Obama on the so-called "Grand Bargain." I sure hope, on that topic, that his boss would have the public and private loyalty of his own staff chief on the subject matter. There is hard bargaining ahead on the Federal budget. Jack Lew is extremely well positioned for it. Face it; realists wouldn't want it any other way.

        On the other political hand, what do the Republicans not like about Jack Lew? The distinguished Jeffery Sessions (R-Ala.) thinks Lew lied to Congress. (Coming from him, that's practically a compliment.) John Boehner (who is used to getting 98% of what he wanted, remember?) and other Republicans blame Lew for being obdurate during negotiations! What in the hell would we have him be? The National Review thinks he will tax and spend as Obama's "spear-carrier." Is there any left-of-Far-Right nominee that NR would not say that about?

        That's why Jack Lew is different. Admit it, we ain't gonna get Senator Warren for the job, not yet. Jack Lew's a good choice, ideal in fact for what's ahead.

        2014 IS COMING. Build up the Senate. Win back the House : 17 seats. Plus!

        by TRPChicago on Sun Jan 20, 2013 at 11:41:29 AM PST

        [ Parent ]

        •  18 months in the private sector is enough (0+ / 0-)

          to disqualify someone permanently for government service?

          Come on, Lew is no Jon Corzine!

          •  No, to the contrary. It gives some credibility... (1+ / 0-)
            Recommended by:
            charliehall2

            ... to be Secretary of the Treasury, who deals with Wall Street as no cabinet member does. Having no exposure whatever in markets, banking or High Finance might well be disqualifying.

            That's actually my point. Wall Street is a base Lew has touched, albeit much less than Rubin and Geithner, but what's needed as much in these times is a ranking administration official with Federal budget expertise. No wonder Boehner doesn't want to have to deal with Lew.

            2014 IS COMING. Build up the Senate. Win back the House : 17 seats. Plus!

            by TRPChicago on Sun Jan 20, 2013 at 01:56:09 PM PST

            [ Parent ]

    •  If likes of Geithner and Lew are change, I'd hate (28+ / 0-)

      to see stasis.  Inevitably, you will get this type filling key economic policy-making positions.  It's the TOTAL lack of any other type, however, that is both disturbing and disappointing.

      Fine, Krugman has said he wouldn't fit well in such an environment.  Stiglitz, however, spent 2 years as Chair of WJC's Council of Economic Advisors.  Maybe James Galbraith might like to spend some time in a similar position.

      I heard the "team of rivals" term bandied about 4 years ago.  In economic policy, that has clearly never been the case.  Other than Jared Bernstein, who worked for Biden for a few years, I'm having a hard time thinking of even an old-fashioned Dem Keynesian in a position of influence.

      Sadly, this die is cast at this point.  A course has been set from which no significant deviation is remotely possible.  I wish it were different.

      Some men see things as they are and ask why. I dream of things that never were and ask why not?

      by RFK Lives on Sun Jan 20, 2013 at 10:18:43 AM PST

      [ Parent ]

  •  wouldn't it be nice (32+ / 0-)

    if liberal scholars such as krugman and stiglitz occassionally were taken seriously by the self-styled meritocracy. but krugman and stiglitz have had the bad fortune of being proven right about pretty much everything, this past decade. in other words, they are not qualified.

    The cold passion for truth hunts in no pack. -Robinson Jeffers

    by Laurence Lewis on Sun Jan 20, 2013 at 10:08:24 AM PST

    •  Krugman has said, (9+ / 0-)

      and I believe him, that he  does not want a government job.

      "A developed country is not where the poor have cars. It's where the rich use public transportation." - Mayor of Bogota

      by Time Waits for no Woman on Sun Jan 20, 2013 at 10:11:07 AM PST

      [ Parent ]

    •  James Galbraith, no right winger, gave an (6+ / 0-)

      interview with Huffpost a few days ago supporting Lew.  For what it is worth, in the old days they worked together on the Hill and Galbraith thinks Lew has progressive credentials.  I'm not so sure and things change, but it is worth considering.

      Suppose you were an idiot. And suppose you were a Republican. But I repeat myself. Harry Truman

      by ratcityreprobate on Sun Jan 20, 2013 at 10:39:42 AM PST

      [ Parent ]

    •  Obama's understanding of Keynesian economics (7+ / 0-)

      is so rudimentary and incomplete that there is no chance that someone like Stiglitz or Krugman would get any position in the administration or accept one.  Since they ran Christina Roemer off I would be surprised if any first tier economist would accept a position in the administration.  All they will get are business economists or other coulda bins.

      Suppose you were an idiot. And suppose you were a Republican. But I repeat myself. Harry Truman

      by ratcityreprobate on Sun Jan 20, 2013 at 10:48:10 AM PST

      [ Parent ]

      •  Keynesian economics? (10+ / 0-)

        This administration's policy is Hooverism with a thin sprinkling of tax raises on the rich to make it palatable to the electorate. It's about as far from Keynes as you can get.

        They are proposing to cut the budget in the midst of an economic crisis, and to cut the New Deal programs that were partly intended to help protect Americans against the impact of another Great Depression. It's like they want to go back to 1930.

        Have you noticed that in every single speech about the budget Obama insists that we've done no more than make a good start to deficit reduction, that we need to cut more? At a time of high unemployment!

        We have another Herbert Hoover in the WH, except people don't realize it because a) he's an amazing rhetorician and b) he belongs to a historically oppressed ethnic minority, so people assume he must be enlightened and progressive.

        Nothing of the kind! His economic policy is deeply reactionary.

        "In America, the law is king." --Thomas Paine

        by limpidglass on Sun Jan 20, 2013 at 11:27:41 AM PST

        [ Parent ]

        •  Yep. Hooverism aka Reaganomics. (3+ / 0-)
          Recommended by:
          xaxnar, PrahaPartizan, Chi

          Obama admin appoints neo-liberals to key economic posts.
          Reaganomics has been very good to them personally.
          Maybe they believe it's going to eventually work for the economy at large.  It won't.  30 years proves that.

          Carlos Fuentes explains how well it worked out in Latin America in "A New Time for Mexico":

          " Throughout the nineteenth century, Latin America followed the precepts of laissez-faire and the magic of the market… Powerful economic elites emerged from Mexico to Argentina. The hope was that the wealth accumulated at the top would sooner or later find its way down to the bottom. This did not happen. It has never happened. Instead, the wealth generated at the working base found its way to the top and stayed there.”

          Reaganomics in a nutshell.

          We need Keynesian economics, stimulus, not austerity.

        •  Hoover would never have proposed a stimulus (1+ / 0-)
          Recommended by:
          FG

          package like the one Obama promoted that was partially approved by Congress. The reasons that there hasn't been more has been

          1) Republican obstructionism, and
          2) Other goals, like health care and re-regulation of the financial sector, both of which were enacted

          The main reason that there hasn't been another Keynesian stimulus package is really because WE didn't turn out the vote in the 2010 general election, and the Rethugs took control of the House.

          •  All may very well have been the case (0+ / 0-)

            But what's needed is beyond Keynes

            e MMT unum
            Until progressives understand MMT, we stand no chance of convincing teaching anyone else, or accomplishing anything, anywhere, anytime.

            The only excuse at this point is that even Krugman doesn't really understand -- though he's making some incremental progress recently.

            United We Understand

            by dorkenergy on Mon Jan 21, 2013 at 06:38:22 PM PST

            [ Parent ]

      •  On Christy Roemer (4+ / 0-)

        I think Summers ran her out because she lacked the math gene.

        This aggression will not stand, man.

        by kaleidescope on Sun Jan 20, 2013 at 11:39:57 AM PST

        [ Parent ]

        •  More likely, she lacked the perverted (0+ / 0-)

          math gene that endemic to neoliberalism (where plus is minus).

          But an alternative version of the story on Christy Romer (proper sp.), in an article by William Black where he quotes from the WashingtonPost WonkBlog:

          From Zach Goldfarb’s excellent profile of Treasury Secretary Timothy Geithner’s success inside the Obama administration:
          The economic team went round and round. Geithner would hold his views close, but occasionally he would get frustrated. Once, as [then chairwoman of the Council of Economic Advisers Christina] Romer pressed for more stimulus spending, Geithner snapped. Stimulus, he told Romer, was ‘sugar,’ and its effect was fleeting. The administration, he urged, needed to focus on long-term economic growth, and the first step was reining in the debt.
          Wrong, Romer snapped back. Stimulus is an “antibiotic” for a sick economy, she told Geithner. ‘It’s not giving a child a lollipop.’

          In the end, Obama signed into law only a relatively modest $13 billion jobs p remarksrogram, much less than what was favored by Romer and many other economists in the administration.”

          William Black remarks:
          If Geithner had not helped block the push by Romer and Summers within the administration for greater stimulus the U.S. recovery would be far more robust and millions more Americans would be employed. (In fairness, the Republicans and conservative (“Blue Dog”) Democrats who killed the revenue sharing portion of the stimulus bill and insisted that much of the stimulus had to be in the form of the extension of tax cuts for the wealthy, which have a far smaller stimulus effect than alternatives, also cost millions of Americans their jobs.)

          United We Understand

          by dorkenergy on Mon Jan 21, 2013 at 07:08:11 PM PST

          [ Parent ]

          •  Thank You for this Response n/t (1+ / 0-)
            Recommended by:
            dorkenergy

            I actually learned something.

            This aggression will not stand, man.

            by kaleidescope on Fri Jan 25, 2013 at 10:09:52 AM PST

            [ Parent ]

            •  As one grasshopper to another (0+ / 0-)

              William Black is one of the leading proponents of "Modern Monetary Theory (MMT)".

              MMT is emerging as "a" (if not "the") key enabling tool for all progressive/dem goals (directly for those that require $; indirectly for the rest by removing distractions from the public discourse).

              If you're not familiar with it, I'd suggest exploring.

              For starters, there's a fun, quick, explanatory video, MMT for Dummiez. That site is a great centralized resource. One of the main contributors there is Joe Firestone. He cross-posts on dKos as Letsgetitdone.

              If you'd like more pointers, I can provide.

              United We Understand — e MMT unum

              by dorkenergy on Fri Jan 25, 2013 at 12:50:31 PM PST

              [ Parent ]

      •  Most likely, the President understands Keynes (3+ / 0-)

        Just fine.  As the leader of his class, he rejects it.  

        These are people who believe our only realistic course is to beggar the working class.  In short, the President is tasked as a member of, and leader of, the plutocracy to manage the current phase of the decline of the working class and the continuing consolidation of corporate rule.  His actions and associations are demonstrations of this principle.

        The President knows exactly what he's doing; I don't see how a person of such intelligence and education wouldn't know.  Like the rest of his class, he's convinced himself that his (and their) course is necessary and, however, painful for the rest of us, ultimately beneficial.

        The President's failure here is not one of understanding, but of morality and courage.

        Any significant cut to the social safety net ends my support for the Democratic party.

        by MrJayTee on Sun Jan 20, 2013 at 11:42:27 AM PST

        [ Parent ]

        •  Your hypothesis (0+ / 0-)
          Most likely, the President understands Keynes
          just fine.  As the leader of his class, he rejects it.
          is arguably correct.

          A more minimal assumption -- in line with some of the other comments here -- can be taken from the line I chose to  highlight in William Black's piece below, Jacob Lew: Another Brick in the Wall Street on the Potomac. (I include more here for consideration in the others. There's more there -- suggest a full read. But I want to focus on just that one line.)

          Lew's predecessor as chief of staff was William Daley. Daley is a lawyer. Daley was on the executive board of J.P. Morgan- Chase during the crisis and before that he was on Fannie Mae's board of directors. Daley is a member of "Third Way's" controlling board. Third Way is a Pete Peterson ally that lobbies in favor of austerity and cuts to the safety net. It pushes Wall Street's, and Pete Peterson's, greatest dream -- privatizing Social Security. Privatization would allow Wall Street to increase its profits by hundreds of billions of dollars in fees for managing our retirement savings.

          Daley's predecessor as Obama's chief of staff was Rahm Emanuel. Emanuel's degrees are in the liberal arts and communications. Clinton appointed him to Freddie Mac's board of directors during the period when the board was heavily criticized for its failure to prevent massive accounting abuses at Freddie Mac. Emanuel worked for Wasserstein Perella, the prominent investment banking firm.

          The obvious aspects of this pattern include: (1) Obama prefers to have Wall Street guys run finance (despite coming to power because Wall Street blew up the world), (2) the revolving door under Obama that connects Wall Street and the White House has been super-charged, and (3) even very short stints in Wall Street have made Obama's finance advisers wealthy.

          The unobvious aspects of the pattern compound these problems. First, Obama likes to surround himself with failures. Geithner set the pattern. He was supposed to be the principal regulator of most of the largest U.S. bank holding companies. He was an abject failure. His speeches and his statements at the Federal Reserve System's FOMC meetings during the crisis demonstrate that he remained clueless to the end. For reasons of brevity, I discuss only three of his failures as Treasury Secretary below.

          Lew has gone from failure to failure. He was one of the architects of both of the Clinton administration's disastrous statutory deregulatory actions that helped produce the epidemic of accounting control fraud that drove the Great Recession.

          The fourth non-obvious problem is that Obama chooses as his principal financial advisors people who have not been trained to have financial expertise. Geithner studied international politics. Emmanuel studied speech. Lew, Obama, and Daley studied law. Lew, Daley, Emanuel, and Geithner all worked in finance, but they did so because of politics and who they knew rather than what they knew. Competence was never the key.

          Given that, a way to state the more minimal hypothesis is
          Accepting that:

          1) Obama chooses as his principal financial advisors people who have not been trained to have financial expertise. (as highlighted above)

          2) The thoroughly discredited neoliberal school has dominated economics instruction for the past several decades

          3) Neither Obama, Lew, Geithner, nor Daley have been exposed -- in an academic context -- to a critique of neoliberalism sufficient to expose its mathematically perverse accounting.

          then Obama, Lew, Geithner, and Daley have simply been beguiled by the myths they (and the rest of us) have been exposed to and the propagators of those myths.

          The question is how should we direct our foci and resources given our assessments of likelihood of the two (minimal and maximal) hypotheses.

          e MMT unum United We Understand MMT

          by dorkenergy on Mon Jan 21, 2013 at 08:39:45 PM PST

          [ Parent ]

      •  Obama is a firm believer (5+ / 0-)

        in the Rubanite fundamentalist school of free/trade market. Who he appoints is a reflection of his economic ideology. There is nothing progressive about his approach to the economy. He made that quite clear in an early speech 2006 at the launching of the Hamilton Project.

        Geithner may not have worked for Goldman Sachs, Chase or Citi  but he was a facilitator for the bankster's. Any president that makes Immelt, the CEO of GE, job czar at a time like this isn't interested in an economy that is just or equitable. Quite the opposite. Clinton's 'inevitable' wealth creating NWO or as Axelrod said 'the world as we find it' is what this administration is about.

        The DLC on steroids,  The Third Way is the direction he's following. Why would he appoint anyone who reflected the New Deal, or any progressive economic policy and direction?

        'We do not disparage wealth creation in America'  Barack Obama

        Instead we are asked to share the sacrifice to keep the 'inevitable' vampire squid firmly implanted on humanities face. How delusional to think the savvy businesmen running our party and the government would appoint anything other then the people who are invested in and believe in  'The Theory and Implementation of Oligarchical Collectivism'.    

  •  For some middle class = poverty (13+ / 0-)

    I observed this strange belief in my sister.  She had a high administration job at a university and was making, say, middle triple digits in salary.  Then she was fired, more for her hubris than anything else, I think.  I was with her in the period right after this and we were driving around my small northern California town and we passed the trailer park.  That is where I am headed, she said.  I told her, no, middle class life is not that onerous.  You just have to pay attention to where your money goes.  Bicker with the cable company about your monthly charges, etc.  You still can live well and enjoy life.

    She went on to get another university administrative job that was paid much less (but more than I ever made as a professor).  Now she says of her past:  "I was living in fantasy land."

    "A developed country is not where the poor have cars. It's where the rich use public transportation." - Mayor of Bogota

    by Time Waits for no Woman on Sun Jan 20, 2013 at 10:17:12 AM PST

  •  In a nutshell (2+ / 0-)
    Recommended by:
    david mizner, jck

    This, has been and will be--the American way. Sad, but only prestige and connections breed more prestige and connections.

    "If the machine of government is of such a nature that it requires you to be the agent of injustice to another, then, I say, break the law."-Thoreau

    by mishal817 on Sun Jan 20, 2013 at 10:17:13 AM PST

  •  The corruption is (12+ / 0-)

    perhaps too excessive and blatant to be believed. And for all the alleged complexity and esoterica that Wall Street likes to hide behind, a ten year-old could understand it, although that ten-year old might say, No Way, it can't be like that.

    I mean, Tim Geithner, as president of the New York Fed, misses the housing bubble, is rewarded by President Obama with the keys to the economy after the housing bubble bursts and send the economy into crisis or perhaps "crisis," which Geihthner uses to give hundreds of billions of dollars of no-strings money to the banks.

    No way: it can't be that ridiculous, can it?

    •  It's sad to have to repeat Upton Sinclair's line (11+ / 0-)

      "It's hard to get a man to see something when his salary depends on him not seeing it."

    •  There have certainly been enough pieces that I am (2+ / 0-)
      Recommended by:
      midwesterner, chuckvw

      beginning to question this myself.  At the start of Obama's presidency, I remember the discussion about how he appointed academic thinkers who had studied the Great Depression and consequently had academic solutions that differed from the traditional political based approaches.   I took comfort in this and it gave me a sense of hope.  

      During the last four years, there has been a lot of talk about how we need to rebuild main street.  During the same time period, the recession 'officially' ended about a year into Obama's presidency and Wall Street and the big banks are doing better than ever before.  Of course now "they" are saying we're back into a mild recession.  The funny thing is that what little recovery I've seen on main street is due to small people innovating in small ways, not because any of this massive new found wealth has made its way down to the people.

      Now, I think we're even starting to see a new face on some of the old games that brought us things like the housing bubble.  Last week I was at the bank and they wanted to talk to me about refinancing my home loan at the new lower rates.  I was whisked into a room, put on speaker phone with someone who knows where, who asked a few questions and then told me that I qualified for this HARP (?) (sounds like TARP to me) program and there was nothing to sign just say yes and I could have a new home loan.  It seemed an awful lot like a sales pitch for a used car and it made me wonder what sort of economic shenanigans were going on behind the scenes.  I declined their offer.  

    •  I know it's not Wall Street .. (1+ / 0-)
      Recommended by:
      chuckvw

      but another example of the corruption is Liz Fowler .. she used to wotk(more than once) for "Mad" Max Baucus

  •  Awesome diary! (13+ / 0-)

    I am so stealing this line about the treasury secretary being:

    ...federal government’s chief ambassador to Wall Street.
    Perfect.

    "When I was an alien, cultures weren't opinions" ~ Kurt Cobain, Territorial Pissings

    by Subterranean on Sun Jan 20, 2013 at 10:30:20 AM PST

  •  Can't believe Lew's background hasn't been (6+ / 0-)
    Recommended by:
    jck, Jim P, chuckvw, coral, shaharazade, Chi

    reported on here before. I hadn't bothered because I didn't think it would be well received. Also he has anti union stance in his background.

    "I'm sculpting now. Landscapes mostly." ~ Yogi Bear

    by eXtina on Sun Jan 20, 2013 at 10:33:25 AM PST

  •  "Chief Ambassador to Wall Street" (3+ / 0-)
    Recommended by:
    temptxan, chuckvw, shaharazade

    Damn, that's good.

    The Aggressively Ignorant Caucus is getting aggressively ignorant again.

    by Anthony Page aka SecondComing on Sun Jan 20, 2013 at 10:56:15 AM PST

  •  Why is it different in the US? (3+ / 0-)
    Recommended by:
    coral, Chi, PrahaPartizan

    The gap in income between what you can earn as a hedge-fund guy (for example) and what you make as a civil servant is just mind-boggling. Ok, being in the finance sector is not quite as lucrative as it used to be, but it is still very, very tempting to drop off the government payroll and into something that puts you in a different lifestyle entirely. It is crazy money compared to what government employees make.

    (Rubin and the like agree to move the other way only because they are already so wealthy that working for comparative peanuts in a government job doesn't cramp their lifestyle).

  •  It's bad when even people who mean well (2+ / 0-)
    Recommended by:
    chuckvw, shaharazade

    don't have any idea what's needed. What will destroy society sooner, climate change or the ossification of class structure?

  •  Tipped for getting two obscure foreign political.. (3+ / 0-)

    references into one title that is still readable.

    My hat is off to you, sir.

  •  We should be doing something about (3+ / 0-)
    Recommended by:
    chuckvw, shaharazade, midwesterner

    ..America's version of the Boyars.

    No, I don't speak a word of Russian, just picked it up yesterday from a decent read - Putin's Labyrinth by a journalist named Steve Levine.

    Can't help but continually notice the stark similarities between their oligarchs and ours.

    Should have seen them tossing money around and bidding on the original Bat-mobile from the campy '60s TV series yesterday. Whimsical purchases apparently stop being whimsical at $4.2 million.

    The Aggressively Ignorant Caucus is getting aggressively ignorant again.

    by Anthony Page aka SecondComing on Sun Jan 20, 2013 at 11:12:39 AM PST

    •  Russian and US oligarchs created by same (2+ / 0-)

      neo-liberal economic policies.  Unsurprising the outcome is similar.

      See this paper by Michael Hudson.

      Today’s [Russian] economic polarization was planned at the outset, in the logic spelled out at the 1990 Houston Summit. Neoliberals were given a free hand in designing the post-Soviet economies, and they had no intention of creating a Western style mixed economy with progressive taxation and anti-monopoly regulation. The very idea was anathema to them. The ensuing dismantling of industry and asset stripping throughout the former Soviet Union stands as an indictment to the advice they gave.

      When a government pursues impoverishing economic policies for a sustained length of time, there always are special interests at work.

    •  And (1+ / 0-)
      Recommended by:
      PrahaPartizan

      per Hudson above

      Meanwhile, the Houston Report’s neoliberal advice blocked Russia’s government from Keynesian-type spending programs to support the economy and invest in infrastructure. Russia was told to restrict its budget deficit to a drastic low of 2½ to 3 percent of GDP. This blocked it from providing the economy with the purchasing power needed to grow.
  •  The senior senator from Indiana is one... (3+ / 0-)
    Recommended by:
    turdraker, chuckvw, PrahaPartizan

    ... example of a person who has gone from elected office, to lobbying, to elected office (IN-Sen in both cases).  

    He took considerable flak for it in the campaign, but unfortunately it wasn't enough to turn the tide, either in the primary or the general.   (Bayh's dick move and the appointment of the useless Brad Ellsworth as Dem nominee didn't help, although the year being 2010, I'm not sure anything would have helped...)

  •  policies matter more than past and future (2+ / 0-)
    Recommended by:
    chuckvw, Chi

    I wouldn't have a problem with a permanent ruling class rotating in and out of government, think tanks, and corporate boards of directors, so long as their heads were screwed on right and they and their subordinates and proteges actually ran things well.

    The cynic in me could argue that our problem is that the people in charge don't feel a sense of ownership, and instead see the government, the business world, and society as a whole as Someone Else's Money for them to loot.

    The old sedentary aristocracy content to skim off the top of a healthy and stable society has reverted to its rape, pillage, and burn horse nomad origins.

    Something's wrong when the bad guys are the utopian ones.

    by Visceral on Sun Jan 20, 2013 at 11:20:45 AM PST

  •  Name the politician pushing relentlessly (3+ / 0-)
    Recommended by:
    turdraker, chuckvw, Chi

    for jobs: good jobs for Americans, and in America.

    Jobs as the fix to the deficit issues. Jobs as the fix to the safety-net drains. Jobs as a fix to the shrinking middle-class. Jobs as a fix for growing human pain.

    I don't mean an occasional speech around campaign time. I mean with daily Fiery Urgency.

    Maybe there's a thousand top politicians when you add up the Federal Offices, the top Fed bureaucrats, and Governors and State Legislator heads.

    Of those, if you can find one, it would probably be Bernie Sanders. Maybe you can find three or nine more.

    There is no doubt whatsoever that our entire political class has abandoned the people of America. They are no more interested in our well-being, even the "liberals," than King George III.

    And as with George III, the priority is to keep the bankers whole, the people be damned.

    PS: You could also ask the "how many" question about ending the War Formerly Known as on Terror. Since it started, and through Obama's term, we have seen al qaeda and Islamicists greatly strengthened, and the US greatly weakend. Weakened vis-a-vis the world's interest in allying with us and in our economy.

    Again, you'll find one or four or ten of a thousand.

    The last thing on DC's mind is the American people. Just how to bamboozle us come election time, and that's it.


    Markos! Not only are the Gates Not Crashed, they've fallen on us. Actual Representatives are what we urgently need, because we have almost none.

    by Jim P on Sun Jan 20, 2013 at 11:21:15 AM PST

    •  Pitch Perfect (0+ / 0-)

      on Jobs, Sanders, King George, and "the War Formerly Known as on Terror".

      Oh, well, one quibble re deficit. There is no "deficit" that needs to be "fixed". A "monetarily sovereign" government budget is not like a household budget. It is a holdover from the gold-backed currency days -- and continues to be propagated by

      NEOLIBERAL POOPYHEADS and the SELF-SERVING SOCIOPATHS
      You're right that the focus should be on jobs -- all the way to "full employment". And a monetarily sovereign government can -- despite Obama's cluelessness/denials -- issue currency to pay all the "debts" owed to banksters -- and invest as needed for the public purpose in the economy until we start hitting "real" constraints like "full employment" -- all without fear of inflation.

      "Deficit" is a badly choice for an account. It's not a negative. It's a positive -- particularly in a down economy. It's government's "net contribution" to the economy.

      MMT (Modern Monetary Theory) corrects all these errors.

      See here, here, here for starters (and here for a fun, quick, explanatory video "for dummies").

      United We Understand — e MMT unum

      by dorkenergy on Mon Jan 21, 2013 at 09:15:04 PM PST

      [ Parent ]

  •  The global financial apparat (4+ / 0-)
    Recommended by:
    turdraker, coral, Chi, PrahaPartizan

    is determined to destroy bourgeois social democracy. The UK is being consciously, purposefully driven back into recession as we speak. As austerity bites deeper even Germany is slipping. Real unemployment still hovers just under 15% in this country and no one in our "government" so much speaks of it.

    I no longer have even the scintilla of a doubt that financial capital and the governments that it owns are determined to follow this course. To believe that these people are misguided and can't see that their solution to our crisis "isn't working" is the height of naivete. Our crisis is their opportunity. It's the Davos/Village consensus.

    So when Obama intones phrases like "shared sacrifice" and extols the virtue of kitchen table economics, remember that he and his administration are in on this.

    Gorbachev's downfall and the rise of the Russian kleptocracy wasn't anomalous. It was paradigmatic.



    Perpetual crisis means never having to say you're sorry.

    by chuckvw on Sun Jan 20, 2013 at 11:30:48 AM PST

  •  I think it's deeper than mere "corruption" (4+ / 0-)
    Recommended by:
    chuckvw, billmon, Chi, MKinTN

    It's an ethics thing.

    Corrupt politicians and apparachicks know that what they're doing is ill advised / wrong / illegal.

    What this superb diary describes is a complete lapse of ethics.  A personal lack of ethics is not acknowledged as a bad thing in both government and corporate financial circles, at least as long as it stays on the fuzzy line between legal and not.  In fact, a lack of ethics (or the ability to bend them to situationally suit a particular position) is almost a required attribute to be able to function in that professional realm.

    I've come to believe that to operate successfully in the world of money, one can  have neither empathy or ethics.

    It's not personal, it's just business.

    "Mitt who? That's an odd name. Like an oven mitt, you mean? Oh, yeah, I've got one of those. Used it at the Atlas Society BBQ last summer when I was flipping ribs."

    by Richard Cranium on Sun Jan 20, 2013 at 11:50:43 AM PST

  •  People elect a University of Chicago.... (4+ / 0-)
    Recommended by:
    charliehall2, elmo, FG, PrahaPartizan

    ...law professor, and then get all pissed off because there's still been no call from him to expropriate the expropriators, and property still isn't theft.

    No disconnect there, no siree.

    You want a revolution, you revolt. But you don't elect, and then complain when you get a politician instead of a revolution.

    Me, I have no problem with piecemeal, incremental, social-engineered change. Revolutions don't always go where the wheel is pointed anyways.

    "Politics is not the art of the possible.
    It consists in choosing between the disastrous and the unpalatable" J.K. Galbraith

    by Davis X Machina on Sun Jan 20, 2013 at 11:52:00 AM PST

  •  The financial oligarchy or the theocratic state? (4+ / 0-)

    Are those our only choices now?

    Corporate Democrats or right-wing Republicans?

    Wonderful.

    Tell me what to write. tellmewhattowrite.com 'To know what is right and to do it are two different things.' - Chushingura, a tale of The Forty-Seven Ronin

    by rbird on Sun Jan 20, 2013 at 11:56:31 AM PST

    •  Third Choice: Revolution (0+ / 0-)

      I presume you address the only two "peaceful" alternatives?  Once either gets established, the third becomes apparent despite being there all along.  Of course, the question is how to ride the tiger.

      "Love the Truth, defend the Truth, speak the Truth, and hear the Truth" - Jan Hus, d.1415 CE

      by PrahaPartizan on Sun Jan 20, 2013 at 09:02:05 PM PST

      [ Parent ]

  •  Head of the NY Fed (1+ / 0-)
    Recommended by:
    FG

    barely makes enough in salary to raise a family with a middle class lifestyle in Manhattan. I do not begrudge him.

    •  Really? $410,000.00 is barely enough? n/t (0+ / 0-)
      •  In Manhattan? You betcha! (1+ / 0-)
        Recommended by:
        charliehall2

        You had better believe that a salary of $410K annually in NYC would be considered upper middle-class at best.  A person in his position will be expected to do a fair amount of entertaining as part of the job, which will demand a certain home residence, which will be expensive in Manhattan.  It is very easy to wind up paying over $10K per month in housing expenses in one lives in Manhattan, which would mean that $410K salary balances exactly against a historic earnings-to-monthly housing expense ratio.  If he happened to own a car in Manhattan (not recommended), that would add at least 50% to that number just to garage the vehicle.  

        "Love the Truth, defend the Truth, speak the Truth, and hear the Truth" - Jan Hus, d.1415 CE

        by PrahaPartizan on Sun Jan 20, 2013 at 08:59:50 PM PST

        [ Parent ]

    •  I wouldnt go that far. (0+ / 0-)

      But it only puts you in the 10%, not the 1% -- much less the .01 percenters on Wall Street.

  •  Obama's just another politician; sadly (0+ / 0-)

    I don't expect anybody to believe this, but just wait until he's out of office.  He'll just quietly write books.  AND DO nada for the Democratic party, or the liberals and progressives that put him into office.

    80 % of Success is Just Showing Up ! We showed up and voted and we got THIS!!!

    by Churchill on Sun Jan 20, 2013 at 04:20:37 PM PST

    •  There aren't enough liberals and progressives... (1+ / 0-)
      Recommended by:
      Churchill

      ....to put a president into office in this country -- not without a lot of help. It's not exactly Denmark.

      "Politics is not the art of the possible.
      It consists in choosing between the disastrous and the unpalatable" J.K. Galbraith

      by Davis X Machina on Sun Jan 20, 2013 at 06:32:44 PM PST

      [ Parent ]

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site