Philip Pilkington: The History of Greed – An Interview with Jeff Madrick

Jeff Madrick is a journalist, economic policy consultant and analyst. He is also the editor of Challenge magazine, which seeks to give alternative views on economics issues, as well as a visiting professor of humanities at The Cooper Union, director of policy research at the Schwartz Center for Economic Policy Analysis, The New School, a senior fellow at the Roosevelt Institute and the author of numerous books. His latest book, The Age of Greed, is available from Amazon.

Interview conducted by Philip Pilkington, a journalist and writer based in Dublin, Ireland.

Philip Pilkington: Your book The Age of Greed is a detailed historical survey of some of the key figures that facilitated — broadly speaking — the transition away from the progressive, government-regulated economy of the post-war years and toward the finance-driven, deregulated economy in which we now live. In this interview I don’t want to focus on all the figures that crop up in the book as that is done so there in great detail. Instead I want to explore the broad sweep of this history focusing both on some of the more recognisable of these figures and on the actual cultural, political and economic shift that took place over this period.

So, let’s begin.

Your story really begins in the early 1970s. In those years there were a number of figures — most of them somewhat obscure — who held beliefs or ideologies that, while quite idiosyncratic at the time, have come to dominate the debate today. These are, to boil them down somewhat, ideologies that eschew government involvement in capitalist economies and emphasise the role of the individual in society rather than the role of the society in the individual. In the book you say that these ideologies were long dormant in the US. How far back would you trace them in the form we know them today? Where were they hiding? And why did they begin to stir in the early 1970s?

Jeff Madrick: America has long been a more individualistic nation than most European nations, or even the other North American nations, Canada and Mexico. This has become a dangerous cliché among historians, but I think it is largely true. The reason I say it is dangerous is that the role of community and government in America has been generally underestimated. As I wrote in an earlier book, ‘The Case for Big Government’, community and government investment in education, infrastructure, sanitation and so on were immense. Beyond that, there were long-standing regulations in America that enabled it to grow more equitably – notably, regulations on sales of land that made it more accessible to poorer Americans.

Nevertheless, the availability of land and resources enabled many Americans to make it on their own. They believed they did it without government, especially when looking back nostalgically. They also interpreted their 18th century break from Britain ever after as a renunciation of powerful central government.

Thus, in important ways, the return to individualistic, anti-government attitudes did have profound antecedents in the national character. Progressivism got its start in the late 1800s in the US, but the strong individualistic bent suppressed social policies, nevertheless. European nations adopted Social Security systems, for example, but the US did not. These individualistic characteristics had been partly set aside by the ravages of the Depression, but not completely. America refused to adopt a nationalized health insurance program, for example.

It is often forgotten that the social policies of the Johnson era were also hard to win. The war on poverty and the civil rights movement were not moments of bipartisan agreement. In this regard, I don’t know where President Obama gets his sense of history, or how thing were done in America.

The turn against progressivism in the 1970s was mostly the result of economic crisis. But it was an easier battle to win ideologically – or that is, for people like me, to lose – than realized because of America’s past. It was mostly economically driven, if not entirely. Many disliked the Johnson Great Society, for example. They also became increasingly skeptical of Washington with the Vietnam War and Watergate.

But the rise of inflation and unemployment in the mid-1970s so severely set back the American economy and frightened people that they needed new explanations – and scapegoats. Not only did inflation soar while the economy generated inadequate jobs, but the trade and budget deficit also rose and people saw an invasion by Japanese, German and other products in their everyday lives.

It is not an exaggeration to say that America panicked. They gravitated towards the simple views of men like Milton Friedman, who blamed government for their discomfort and insecurities. Businessmen were quick to join them, beating down government intervention wherever they could. And older line progressives fought back weakly.

In 1973, Ronald Reagan, as government of California, tried to have an amendment to the state constitution adopted that would permanently cut the state income tax. Voters defeated it soundly. Some thought Reagan’s political career was over. In the next five years, economic panic took hold and Friedman’s simple, anti-government ideas became compelling as explanations.

By 1978, Californians now voted overwhelmingly for Proposition 13, which cut property taxes sharply. A successful nationwide tax revolt got underway. Progressive only five years earlier, and still believing in social programs, the nation’s attitudes changed. This change was not yet the work of right-wing think tanks and moneyed lobbyists; they were just starting to organize. It was the attitude of the people that changed and set the change for a regression in social policies and deregulation of finance and other industries.

PP: You mention Milton Friedman. It would be hard to understate his importance. The impression I got from your book is that this anti-government movement was largely fragmented and dispersed before Friedman came along. It was him that lent serious intellectual weight to the movement and gave it the sort of policy prescriptions and theoretical sanction that it needed to rally its troops.

Yet, I cannot get over the impression that Friedman was not so much rejuvenating economic theory with new ideas as much as he was reinventing something that had been discredited decades before hand — or, at least, so many thought. Could you talk a little bit about this?

JM: There were other intellectual forces out there, not least of them Ayn Rand. And there was always a strong conservative undercurrent. William Buckley was one of its leaders. Von Hayek’s 1944 book, The Road to Serfdom, was influential. It was a best seller.

But Friedman’s work was eventually thought of as very serious and congealed the movement. Its basic assumptions were hardly original at all. You are right. He basically resurrected the old classical and neo-classical lines of thought about market economies and then profoundly over-simplified them. His very accessible and even compelling book, Capitalism and Freedom, was influential partly because it was so understandable. He seemed to provide an answer. It basically said competition and freely set prices will cure most social ills to the extent they can be cured at all. Government will almost always make matters worse.

But there was nothing in Friedman that wasn’t already fundamentally in Adam Smith. He did update those notions and attached somewhat far-fetched ideas to them about the value and power of the money supply, which in truth cannot even be controlled. The nation’s obsessive focus on inflation was also his doing. Many, including Democratic economists, thought he proved his point. I think he did not, and that theories like the natural rate of unemployment, the foundation of the inflation obsession, will be dismissed fully in time. But he gave the movement intellectual credibility and he was wonderfully articulate, to boot. In truth, his intellectual contributions will not live, however.

PP: That certainly raises a lot of questions about our present moment. It seems that many economists — at least those in the media and in the public eye — have become entrenched in their positions rather than responding to circumstances which have clearly changed. But we’ll discuss this later in the interview.

For the moment, let’s shift back to the politics of the era in question. The presidency of Jimmy Carter represents for many post-war liberalism in its death throes. Underneath the shift in economic policies — Carter, for example, led the charge on deregulation and had misgivings about running budget deficits for social programs — there was a deeper moral or even existential crisis of establishment liberalism. This crisis was clearly manifest in Carter’s famous ‘malaise speech’. That speech was famously criticised by the cultural historian Christopher Lasch — whose work was supposed to have served as an inspiration for the speech — for making it seem that the president was asking working Americans to give up some of the gains they had made in the post-war years to facilitate less consumption.

You say in the book that the fracturing of the liberal project was largely due to the inflation shocks of the 1970s. Do you think that it can really be held fully responsible for the sense of hopelessness — of malaise, even — that overcame the liberal establishment in those years?

JM: I actually think explains a great deal of it. As growth sputtered, there was less money for social projects. Meantime, the liberals did not seem to have an answer for inflation. In fact, they did but they could not stick to their guns because it required a long-term strategy of slowly unwinding inflation. That was probably politically infeasible. Too often, when something doesn’t work in time to have political potency, people abandon their ideas. Strong non-inflationary growth would have brought more people out of poverty and provided enough money for a national healthcare plan.

But the liberal project had some fallacies – the fallacies of excess. Unions did push wages too high in some areas and created an inflexible economy in some industries. Other non-union salaries followed suit. Some liberals could not face the need to reduce the wage share of the economy. This was their problem.

Carter was a fiscal conservative, mostly a true blue Republican in this regard. He tempered it with true caring about the poor and unemployed. He had an unimaginative response to what he saw as an age of limits. We wanted too much, such as oil, and this caused inflation. Let’s want less. Not a strong message, really, and it was wrong.

But if there had been no serious inflation, the progressive tendencies may have survived their enemies – especially those who thought any social programs were giveaways to the lazy and unworthy.

PP: Correct me if I’m wrong but I believe that there was much buzz about wage and price controls in the liberal establishment of the era. Nixon, of course, had given them a half-hearted shot in the early 70s but the innate conservatism of his economic advisers had ensured that they couldn’t be used effectively. My feeling is that these would have worked if given half a chance – after all they had been remarkably effective under Galbraith in the far more extreme environment of WWII. So, why weren’t these taken as a serious policy option by the liberal establishment of the era? Surely they would have been a ‘quick political fix’ if there ever was one.

JM: Wage and price controls had already been developed before 1971, when Nixon imposed them. But Democrats still were favourably on balance. John Kenneth Galbraith had imposed the controls as part of his government duties during World War II. The nation also had some success with them in the Korean War. Paul Volcker, then a key economic advisor for Nixon, definitely favoured them but Nixon stepped on the gas by huge fiscal spending to drive up the economy when he had the freeze so that he could get re-elected.

His wage-price freeze simply was not a serious attempt. He then undid them too abruptly. The Democrats considered them in the Carter term and did indeed impose ‘guidelines’. These could have worked if they had been willing to stick with them but Carter wasn’t willing and the nation was changing, as I noted. Market solutions, not government interference was generally gaining the upper hand ideologically and the Democratic economists never fought back with sufficient determination.

PP: But that means the solutions were there if the Democrats wanted them and they were well aware of them. That they didn’t pick them up and put them into practice means there must have been some sort of cultural shift or moral malaise; it seems to me that this is the only thing that can explain liberals’ flakiness in this period. Maybe your point about the Watergate scandal and the Vietnam War destroying confidence in government might explain this reluctance to wield power? Could you talk a bit more about this?

JM: Yes, as I have been saying there was a cultural anti-government shift in opinion and in the media. This is my main point. Liberals could have fought against it but did not. It wouldn’t even have necessarily worked politically. They would have been pushed out of office unless they were persistent and determined. They were not. In fact, many Democratic economists had strong doubts, already participating in the shift towards laissez-faire attitudes.

The ‘malaise’ was really just simple pessimism. Nothing had seemed to work for years to solve the economic problem of inflation. Carter actually never used the word ‘malaise’ in his speech – but the key point is that he was no good at puncturing the pessimism. Reagan, the mythmaker, was remarkably good at it.

PP: That was going to be my next question. Reagan was, of course, a master orator and a man of considerable charisma and charm. Nevertheless, even without considering his personal qualities, his message seemed to resonate with the times. Could you talk a little about Reagan and how he ‘clicked’ with the American public at this important moment in history?

JM: Well, it is important to remember that he didn’t click national at first at all. He won in California as governor at a time when the state was disturbed about racial issues and the Berkeley free speech movement. He talked tough and his opponent did not take him fully seriously. Then he governed not quite as conservatively as he talked.
What he did best was to understand the concerns of working people, which was his heritage. He didn’t believe – and this is widely misunderstood and misreported – in Friedmanite self-interest. He believed in individuals – that hard work would pay off and we could make our own lives.

He kept trying to get the presidential nomination – in 1968 and then again in 1976 – and failed. But while he failed, he did countless radio speeches – short essays – which forced him to develop his opinions in many areas. He understood the value of a simple story with a cathartic climax. He was conscious enough of his intentions to write this in so many words.

But he was always a Manichean over-simplifier. There was, as in Hollywood, always a bad guy. Early, when he was a New Dealer, business was the bad guy. In the 1950s, he switched; government became the bad guy. As of course was the Soviet Union in international affairs.
When the nation’s views turned in the 1970s, he exploited this well. He stuck to his guns for more than twenty years and his moment came. He radically cut taxes and regulatory staffs, and extended the angry attitude of Americans towards government to tragic ends.

PP: You say that his popularity in California was disturbed by racial issues and the free speech movement – in essence, California was disturbed by what have come to be known as the ‘sixties’. Do you think that the ‘sixties’ and the attitudes that grew out of them had wider and broader cultural effects? Do you think they helped facilitate the turn to Reagan’s rhetoric of ‘individual responsibility’, responsibilities rather than rights; in short, the turn to conservatism?

JM: Yes, there was a reaction to the new social policies and ‘looser’ lifestyle of the Sixties. The social policies had many angry – they mostly helped people of colour, it was thought, or ne’er do wells. There has always been that strain in American politics, this time tinged with racism because of the Civil Rights Act and integration. Also, liberals went too far with busing.

But the catalyst was still the bad economy. There always would have been a pendulum swing, but it probably would have been modest as baby boomers became adults with families.
PP: Let’s move on to Alan Greenspan. In your book you portray Greenspan as a rather mediocre figure, as far as ideas and economics goes. This runs counter to the narrative we’re all used to — the narrative of the ‘master of the universe’ with his finger firmly on the pulse of the world economy. You portray Greenspan as a savvy political player and a free-market ideologue in the crudest of sense, but little more than that. Could you talk about this a little bit?

JM: I certainly would not call Greenspan mediocre. He was a competent Wall Street economist with great talent for networking, assessing the political winds, and positioning himself in a niche where there was little competition – that is to say, articulate Republican economists in the 1970s. He could talk persuasively to businessmen and politicians alike.

But he was, as I say, a Wall Street economist who did not have a sophisticated model of the economy, but instead a by-the-pants model. He also an ideologue with a simplistic notion about laissez-faire economics that he partly derived from the views of Ayn Rand. He suppressed these views, but as his reputation rose, he became more confident that less regulation of financial markets was ideal.

It was based on the most simple ideas about the moderating value of competition. They were decidedly pro-business which, as I explain in the book was probably a leaning he had since childhood. As a Fed chairman, he was intent on suppressing inflation above all other things, also a reflexive Republican attitude.

His actions to keep rates down in the late 1990s have been misinterpreted. He kept them down less because he believed in a new economy than his fears about the financial crises over Long-Term Capital Management and Russia.

In the end, he had more to do with the financial crisis than any other single individual because he refused to regulate and oversee the financial community properly. He insisted derivatives needed no serious regulation. This was purely ideological. He approved of the merger that resulted in Citigroup. He had no idea of the level of risk on Wall Street that he more than anyone else was responsible for.

PP: Perhaps I shouldn’t have used the term ‘mediocre’. My impression from your book was that Greenspan was not much of a theoretical economist – as you say, he was more of a ‘hands on’ kind of guy with an overarching ideology. Do you think that this led his policy in many ways? Purely practical people tend to only pay attention to flaws in a system when things start to go wrong – should such a person truly been in charge of the Federal Reserve?

JM: I don’t think you have to be a theoretical economist to run the Fed. Greenspan didn’t get a PhD but even that need not be an obstacle. He was an ideologue who suppressed his ideology. His one fight was against inflation. He was determined to be as good as Volcker at beating it down. Like most Republicans, he wanted to show that he was tough. His economic analysis was more ground in day to day changes in the economy with little sense of economic dynamics or Keynesian disequilibria or long-term damaging equlibria. For these more subtle concepts, he’d have no sympathy. My personal view is that he was guided by the bond rate. If it went up fast, it meant there were inflationary expectations which he was determined to beat down. He overkilled on inflation, of course. But he also backed off in the late 1990s. Many attributed this to his prescience about the New Economy, regarding which he had sophomoric views. He kept rates down, instead, because of the economic crises in Asia, Long term capital management and in Russia. He suppressed his ideology for a while but as the adulation for him increased, he became increasingly ideological – much to the detriment of us all. He was more responsible for this crisis than anyone else by far. And that was purely down to his ideology.

PP: Okay, let’s move onto Clinton. I was surprised he wasn’t included in your book. Carter was there but not Clinton. Yet, Clinton’s administration oversaw some of the most substantial deregulation of any period which culminated in the elimination of Glass-Steagall. Clinton also oversaw what some might consider a sort of mania for a balanced budget – one that may well have pushed the household sector into a net borrowing position. The Clinton period was also the time when asset bubbles began to seriously float deficient economic growth – I refer, of course, to the DotCom bubble. Could you talk about all this?

JM: I talk about Clinton quite a bit in the book, as you know. More deregulation occurred during his administration than others. But much of the story is familiar. I tell this story through Wall Street and Alan Greenspan. In particular I discuss how Bob Rubin and Larry Summers convinced Clinton that any surplus be put back into the bond market. I also cite Clinton’s claim that it was the end of the era of big govt.

But the big trends were already underway when he took office. Clinton did not stop them. The mania for budget balancing really began in the 70s. It intensified in the 80s with the Reagan deficits. George HW Bush was determined to tame them and had a tax increase passed. Then came Clinton’s tax cuts and they seemed to work.

Meanwhile Greenspan raised interest rates unnecessarily, akin to a kind of shock therapy. Rates came down and a boom got underway, supported more by financial asset inflation than was realized. Ever the fantasist, Greenspan pinned it on high technology and allowed rates to fall more. But Clinton, only and always trying to get credit, attributed it to the tax increase and a balanced budget. Rubin believed that this reduced the crowding out of private borrowing. Never mind all the financial crises in Asia, Wall Street and Russia. Greenspan just stepped on the gas, lowering rates and all the while alluding to a new economy which was at best partly true. Under Clinton the Democrats became the Wall Street party and his refusal to support regulation of derivatives in 1994 and 1999, under the guidance of Rubin, the former Goldman Sachs co-chief, and Larry summers, the former Keynesian, eventually led to a terrible debacle. They greatly admired Alan Greenspan and never crossed him. Keep in mind, much of the Democratic congress went along. Wall Street got a hold of Washington – and they never let go.

PP: Sorry, I should have said that you didn’t give Clinton a section in the book — of course you do talk about his policies.

I want to talk a little more about the balanced budget. The notion that a budget should be balanced all the time appears to me farcical. Not simply from an economic perspective but also from an historical perspective. Most of the time most developed countries run deficits — if they didn’t they wouldn’t have stocks of public debt. There is, in my mind, without a doubt a link between unbalanced government budgets and capitalist economies.

Yet, the idea of balanced budget has been something of a millstone around the necks of liberals and progressives since at least as far back as Roosevelt. Why do they let the other side lead the debate in this instance? Why do they cling to balanced budgets when it seems so obvious that unbalanced budgets are the historical norm?

JM: Quickly, balancing budgets goes back much farther than FDR. After all, excessive government expenditure, especially on war, has brought down many governments over the centuries. Modern theory suggests budgets should be balanced over the course of the business cycle – not all the time. I don’t agree they need be balanced over the cycle, though. I think there is probably an endemic insufficiency of demand due to inadequate wages, so a persistent, if not constant deficit makes sense. Also public investment will have a positive rate of return – usually.

But balancing the budget is a political football. The Right demands it. They always claim it leads to inflation and crowding out. The Democrats like it when the Republicans run a deficit as under Reagan and George W Bush. There is both hypocrisy and bad economics involved in the whole deficit discussion, unfortunately.

PP: I’d tend to agree with pretty much all of that.

Moving on to the present day after all that was built over this era has collapsed in upon itself, what do you think the future holds? I mean that both from the perspective of regulation — I note that Regulation Q, the bypassing of which you portray in the book as a pivotal moment, just two months ago was cut back to allow interest to be paid on checking accounts. And then there’s the issue of actual economic growth which seems mired due to government reluctance to pick up the mantle after beating themselves down all these years?

In these respects what do you make of this brave new world?

JM: I find it hard to believe that more policymakers, editorial writers and pundits don’t ask whether Wall Street should have as central a purpose in our economy as many take for granted. We should be asking whether Wall Street – that is, the financial community – is justified at all in its present size. The main question my book raises is whether the financial sector does more harm than good. Those who are for re-regulating of Wall Street, including Dodd-Frank and the Obama administration, have never gotten to first principles though. The regulation as proposed will not adequately cut the Street down to size. The institutions should be cut in size and streamlined along product lines that reduce conflicts of interest. Those that take federally guaranteed deposits should be ring-fenced. Those that underwrite or privately place securities should not take deposits and have no access to the Fed discount window. Speculation has to be seriously limited to small institutions through the use of higher capital requirements.

At the same time, a few legal actions have been taken against unethical practices on Wall Street. It is remarkable that so few criminal charges have been made, and that civil cases are settled through relatively small fines to avoid going to court. Fraud law, both legislative and common law (tested by brining cases), must also change.

Without adequate changes that ensure that Wall Street channels money to productive uses, America will have a hard time getting money where it is needed in the economy.

In the meantime, this administration believes that all it needs do is to revitalize finance and credit and this would re-inflate the economy. At the same time no serious attempt was made to make mortgage holders whole – at least in some degree – which is a tragedy.

People are frustrated. A mid-July survey found that most Americans believed Wall Street did more harm than good. My book is about showing how that happened – and indeed, without doing a statistical analysis, I think the book shows that it did happen.

Pair this with the mistaken assumption that fiscal austerity is required to re-structure the US economy, and we probably face a very hard time ahead.

Other nations, on the other hand, have asked the question about the purpose of finance and proposed more stringent solutions, such as the Vickers Commission. Maybe that’s a start.

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  1. attempter

    Well, this certainly got off to a good start, with both participants agreeing that the corporate command economy actually means “deregulation” and being “anti-government”. Orwell would be proud.

    The fact is that corporations and propertarianism as such are the artificial creations of government in the first place, and their radical aggrandizement can only result from big, aggressive government acting as thug and bagman. Indeed, by now no corporate sector could exist at all except as the recipient of massive corporate welfare.

    This command economy is the economic aspect of fascism, and in that sense Western governments are already fascist.

    One of the many ways that today’s corporate liberals are in fact conservatives is their wholesale adoption of conservative ideological terminology like we see here. That’s why I wrote this comment – to highlight how the “debate” is framed in these scam terms, that the answer to rampant corporate aggression is to further increase the power of the same State which enables this aggression.

    It’s meant to astroturf continued faith in the State as such, and in the cult of Better Elites. But it’s all really intended to further the aims of corporate power.

    For a case in point, look at this bizarre contradiction (in consecutive paragraphs, no less)

    But the liberal project had some fallacies – the fallacies of excess. Unions did push wages too high in some areas and created an inflexible economy in some industries. Other non-union salaries followed suit. Some liberals could not face the need to reduce the wage share of the economy. This was their problem.

    Carter was a fiscal conservative, mostly a true blue Republican in this regard. He tempered it with true caring about the poor and unemployed. He had an unimaginative response to what he saw as an age of limits. We wanted too much, such as oil, and this caused inflation. Let’s want less. Not a strong message, really, and it was wrong.

    The first statement is obviously a lie. But although the people who actually do the work allegedly wanted too large a “share” of what they produced (thereby cutting down on the criminal parasite extraction), at the same time it’s “wrong” to say “we” wanted too much oil. How to explain this contradiction?

    Obviously, oil has been necessary to fuel corporate aggrandizement (and consumerism*), while “the wage share” (in English, the amount of the workers’ production which isn’t directly stolen from them) subtracts from that aggrandizement. So the one is presumed to have no limits, while the other is presumed to have very strict limits.

    [*What about the fact that the infinite “consumer” and the worker whose “wage share” needs to be constrained are in fact the same person? Well, nobody’s ever been able to reconcile this contradiction, so it’s too much to ask a post like this to do so.]

    This same pattern of conservative terms, memes, and atmosphere pervades the whole thing. Just a few examples – “lazy and unworthy”; that there’s not “enough money for a national healthcare plan”; glowing depictions of Reagan; acceptance of Wall Street self-evaluation. Madrick’s non sequitur about whether or not Greenspan is mediocre is unintentionally hilarious:

    I certainly would not call Greenspan mediocre. He was a competent Wall Street economist with great talent for networking, assessing the political winds, and positioning himself in a niche where there was little competition – that is to say, articulate Republican economists in the 1970s. He could talk persuasively to businessmen and politicians alike.

    Most non-hacks would call that description of a hack apparatchik the epitome of mediocrity. But as we know corporate liberals have a very different measure.

    The only thing missing in this was the overt claim that Obama will carry out all the “reforms” listed if re-elected.

    1. Skippy

      Pray tell how you live with out ever diminishing any thing or one. How are you able to live with out touching the ground, infecting the water, polluting the air, increasing the global temperature.

      Do you use coal or petrol in your life? How do you run your farm? Do you employ anything other than your own back to produce?

      Skippy…you use a computer you pollute, you are part of the enforced slavery of others, you are part of the problem.

      1. attempter

        I minimize all impacts within the bounds of what I’ve been conscripted into by your system. I have no luxuries, and I want none. I use a computer to communicate, which is the only way open within these artificial bounds you endorse. I grow food on all the land that’s available to me under your enclosure system.

        If I could press a button and end all globalization and propertarianism, thereby instituting “he who does not work shall not eat”, I would do so.

        Maybe this will make it even more clear: If I had two buttons, one of which would make me a billionaire within the otherwise unchanged criminal system, while the other would permanently abolish all wealth concentrations, I wouldn’t need even a second to think about it before pressing the second.

        But it’s good to hear that you’re a purely voluntary participant in all the crimes of kleptocracy. And your laughing at workers who have been illicitly and abominably excluded from the land is a particularly charming touch.

        I’m sure you’ll end up getting exactly what you deserve out of it, as well.

        1. Skippy

          Please answer my questions, how many acres do you farm, how and what do you use to do it, what is your market, how far do you have to transport, how far from your home have your traveled, what other jobs have you held, how many people have you been responsible for at one time, what other experiences can you bring to bare out side your ideological (book only?) understanding of the world you so easy opine about.

          Skippy…other wise rather than use the ignore you ploy, I mark you down as a dirt clod kicker with out a clue.

          1. aet

            Hmmm…those same questions could be asked, mutatis mutandi, as to what he has mined or pumped of late from the earth.

            Farming and mining are productive activities.
            And from production comes our leisure and ease, and our ability to combat and forestall dis-ease.

        2. Skippy

          Classic case of crocodile mouth, but, humming bird ass.

          Skippy..put up or shut up, answer questions and reveal or stop shoving it down everyone’s gob.

          1. Skippy

            LinkedIn profile?

            I’m semi retired, support wife in her medical career and direct most of my time to kids education. The work I do is by years of word of mouth, ethical, trustworthy, personal dedication to the task, relationship building, trust.

            Skippy…LinkedIn…ROFLOL…that’s how Obama got elected…lmao!

      2. okie farmer

        One of my daughter’s friends, an entrenched cynic but brilliant programmer still rising in IT world, asked me about 15 years ago why I farmed. My instant answer was “to grow food to feed humans in the hope that the human project will someday progress to a point that Daniel Quinn’s “takers” (Ishmael) are contained and restrained enough that wars become obsolete and every human’s needs are met”. He told me that what he liked about hanging around my farm was that almost every problem could be fixed with a sledge hammer – tractor, plow, fenceposts… – no IT required. I told him my objective as a farmer was to get my operation simplified enough that my only equipment would be my wheelbarrow and a shovel. Sure, impossible given economic constraints of modern ag, but still a usable metaphor for ideal goals.

        Attempter is not your enemy, skippy; further, he tells us unfailingly who the enemy is. Unlike you to get into ad hominem attack mode – having a bad morning?

        1. Yves Smith Post author

          I have some sympathy for Skippy here. Attempter takes the position that (effectively) that he is pure and no one else is. That invites questions of the sort raised by Skippy.

          1. okie farmer

            Yves, I don’t read a single word of anything Attempter said in this post as taking a position of moral superiority – extreme critic, yes. Maybe _implying_ he’s on morally high ground? So, you (essentially) join Skippy in accusing Attempter of being pure and no one else is? I don’t get it. We’re (all) all about judgement here.

          2. attempter

            Since you’re the lead writer of this blog, there’s no one better suited than you to provide an example of where I’ve claimed purity.

            At the most, I’ve taken the Socratic position that I’m fully aware of the crimes, avoid partaking of them as much as possible, willingly accept none of them, and would end them if I could, while there are others of whom those things are not true.

            And okie farmer is right, I’m hardly unusually judgemental for this place. The only difference is that my judgements come from a position which even here remains at the outer bounds of acceptable discourse. If I just confined myself to ad hoc insults of Obama and Blankfein, nobody would think twice.

          3. bobh

            Occasional reader here. Go to your corner, Attempter. Fight is over. You win on a TKO. I don’t know the history of the differences between Attempter and Skippy (and apparently, Yves), but I think Yves needs to rethink her comment. Attempter could have begun his scornful-from-the-left criticism of the interviewee by saying either “Okay, I am something of a hypocrite, living in mansion with a trust fund invested in Exxon Mobile and Halliburton stock, but…” or “I am better than all of you you because I live under a bridge and work in a free clinic and am writing this on a computer at the public library, and…” and it wouldn’t have affected his arguments. As it is, he said neither. He may believe he is morally and/or intellectually superior to others, but that is a common trait and beside the point. Skippy’s attack and challenge was clearly ad hominem. It could have been made on Karl Marx, who supported himself on stipends from an industrialist. It wouldn’t have refuted Marxism.

          4. Yves Smith Post author


            I beg to differ. I’m not keen on Madrick’s comments on Carter, but Attempter misreads it, takes it out of context of the rest of the interview, and gets tart about it. That is an intellectually dishonest style of argumentation.

            Read these statements:

            But the liberal project had some fallacies – the fallacies of excess…

            Carter was a fiscal conservative, mostly a true blue Republican in this regard.

            For Madrick to call Carter a “true blue Republican” is damning. Madrick is a card carrying liberal, even if he is not terribly liberal. But he is ALSO saying, and this is correct, that the left leaning economists of the day did not have any answers to inflation, they refused to deal with it, and it paved the way for the whole liberal New Deal exercise to be discredited and for the Reagan crowd to come in and start dismantling social safety nets and worker rights. This was a critical period and it is important to understand what went wrong.

            I am a LOUD supporter of unions. But US unions also are not infrequently corrupt, they’ve often been obstructionist on work rules to the point where it wasn’t about helping workers, just proving the power of the union apparatus.

            And look at Madrick’s argument. It was the Nixon deficit spending to get reelected that caused the inflation. But once it got embedded, workers were gonna have to take some pain to get rid of it. The Dems/liberal hacks of the day weren’t willing to go there. The sort of wage/price control Madrick is saying were a viable option would have involved labor taking some short-term pain, but inflation was hurting them too (stagflation was sapping incomes of workers who didn’t have good COLAs, and producing unemployment which was high by the standards of that day().

            So attempter cherry picked (remember, this was an interview, people are not as precise as they can be in writing) and got high and mighty about it. I don’t see his argument as being fair, and yet he has a moralistic subtone to it. That is the basis of my objection.

            Attempter also has a history of taking Manichean positions, and of not being amenable to nuance. The vast majority of human behavior is not black and white, and to force it into that sort of framework is simplistic and often misleading. There are lots of choices between black and white, and most of the time, the best solution to a problem does not lie as the extremes.

            And Attempter, don’t give me assignments. The Ritholtz rules, which I have pointed to as Web standard and my reference point for my own posture, makes it clear that demands like that are off base. You’ve gotten PLENTY of pushback for your aggressive tone in comments. You are WAY out of line for demanding that I document a long standing issue that you are well aware of. I’ve tried to stay out but I have commented on your Manichean tendencies; others have taken issue with the extremism of your positions, and the aggression with which you defend them.

            I’ve thrown out others for being overly aggressive at lower thresholds than yours. You make provocative arguments and add to the debate, so I’ve restrained myself. But frankly, I’ve been exhibiting favoritism to your benefit, and I’m not prepared to cut you additional slack.

          5. bobh


            As i said, I don’t really know the history of the antagonism between Skippy and Attempter.

            Your blog is an island of rational discourse in a sea of the other stuff. I thought, in this instance, that Attempter was combative and maybe stretching things a little ( i.e., saying Madrick said “that there’s not ‘enough money for a national healthcare plan’…’ when he really said that low-inflation growth would have produced money for it) while Skippy was a little hysterical. His demands that Attempter justify his existence before being allowed to express his opinions annoyed me. It reminded me of the republicans demanding to see Warren Buffet’s tax returns.

            I agree with most of your points about 70s economics and politics, but there is a case to be made that the failures of that time, and later times, were partly due to a compact between liberal and conservative economists (and politicians) that placed the power of government firmly behind corporations without too much regard for working people.

            Sometimes it’s hard not to be a Manichean, and I suspect Skippy and Attempter are brothers under the skin. Most of us who don’t know about puts and calls and don’t have HFT on our side lost some money this week, and nerves are frayed. Hope all have a good weekend.

          1. okie farmer

            Attempter, the link to the old comments certainly illustrates Skippy has a tendency to thought disorder. So what? You’ve got to stop rising to the bait of off-kilter critisim. You are much too important to this blog to give Yves an excuse to throw you off. You remind me of the anti-bully bully I went to grade school with. He never sought a fight but if anyone in any grade started bullying anyone, especially one of the samller kids, he would clean their clocks. He made our playground safe for 6 years. He got paddled by the principle frequently enough, for ‘taking the situation into your own hands and not finding the playground teacher”, but he never quit taking down bullies.

          2. skippy

            Attempter, the link to the old comments certainly illustrates Skippy has a tendency to thought disorder. So what? You’ve got to stop rising to the bait of off-kilter critisim. — okie farmer

            Me here, asking questions, seeking clarification, is not an act of baiting (off kilter or other wise), nor is it an act of stalking. In fact attemper has a propensity to that distinction in my book.

            You are much too important to this blog to give Yves an excuse to throw you off. — okie farmer

            Me here, 1. *too important to this blog*[?] the beautification of attempter[?], what mob speaks for such a distinction…eh.

            2. *give Yves an excuse to throw you off” — dearie me, how does one misconstrue intentional act as a case of *giving excuses* for this blogs author to effect clearly stated policy.

            “You remind me of the anti-bully bully I went to grade school with. He never sought a fight but if anyone in any grade started bullying anyone, especially one of the samller kids, he would clean their clocks. He made our playground safe for 6 years. He got paddled by the principle frequently enough, for ‘taking the situation into your own hands and not finding the playground teacher”, but he never quit taking down bullies.’ —- okie farmer

            Me here, 1. *He never sought a fight” it is his propensity to start fights where none existed, to paint a world full of people born into it with out choices, not of their own making, as informed co-conspirators. To vilify any one and thing not conforming to his view (houndred acres woods thingy).

            2. *He made our playground safe for 6 years.* did you grow up with attempter, do you personally know him, how can you attach such deeds in extension with out personal knowledge of the individual, with in the time frame you suggest.

            3. *He got paddled by the principle frequently enough, for ‘taking the situation into your own hands and not finding the playground teacher”, but he never quit taking down bullies.’* — are you suggesting attemper is accepting our sins[?] jumping upon the cross, too absolve us all of our wantonness? I could not agree with you more okie, attempter strikes first, points his finger of sin at every one, having been born with out it.

            Skippy… okie no disrespect too your person (I don’t know you) but, I was that kid. As the smallest in my grade I was descended upon by all those that played the strong makes right rule (whither copying behavior, example set or pure meanness}. In fact teachers seemed to enforce that lord of the fly’s rule, totally useless in arbitrating. So from 2nd grade onwards I have fought for myself and others, including complete strangers.

            PS. on one occasion an ex – Vietnam vet (bikie type 6’6) took exception to the jacket I was wearing (goof ball thing worn by some friends serving on the DMZ) whilst in the bar toilet. He was clearly drunk and thought my physical appearance did not match the message the jacket imbued to me. Any way he rejected every attempt I made to verify my status, he wanted a bar fight. Long story short. I accepted his ofter to retire to the alley. I put him down 3 times without throwing a punch or kick, all whilst he used his huge cluster of keys on a stout key chain aiming for my head. Each time I let him back up to talk about it, only for him to try and sucker punch me. Finally the door bouncers got worried about our absence and call the cops. They came from the winds, three cars, some on foot and some in patrol cars. Having seen the lights refection of the walls, I dismounted his body (him screaming show me what you learned!) to greet the officers. Me standing with a cut above my right eye brow calmly talking to the officers ie. whats going on guys – my response – I lost my watch and hes helping me find it. The look in the officers eyes is a precious moment etched for eternity in my mind and with that it was you go that way and you this. After going home to stitch up my eye I returned to the bar and said good day to the bouncers at the door, on my way in. The rest of the evening was uneventful..en fin.

            PSS. I have taken more people to my home, to hospital, interceded where folks could have been diminished or dead, to actually lend a hand to those for what ever reasons would be injured. All more times than not with out any physical force needed or recompense for my acts.

          3. Yves Smith Post author


            You have this backwards, and I’m astonished you don’t see through this. Attempter has been bullying for quite some time. Most of the people he bullies dish it back, so I’ve monitored and tolerated it. But his posture has long been on the verge of being not acceptable. Skippy is not as adept a writer as some others. He questions how Attempter can (effectively) claim to not be part of the behaviors he criticizes. Attempter refused to engage either his question narrowly or the thought process behind it, which was fine. But he upped the ante by called him a stalker. Now he has enlisted other readers in ad homimen attacks.

            I’m not interested in Attempter’s grudges and score-settling, I care about his interactions on an ongoing basis. There was nothing wrong with Skippy’s tone, Attempter could have either answered his question or ignored him.

            I have NO tolerance for this sort of bullying. This IS grounds for banning. And no one is so “important” that they are allowed to bully. As Clemenceau, and later DeGaulle said, “The graveyards are full of indispensible men.”

      1. LeeAnne

        He’s fun. There’s a poster of his on ZeroHedge this morning that’s simple and priceless.

        My problem with Sandy Weill is that he is the one known for proudly displaying a plague in his office celebrating his single-handed destruction of Glass-Seagal.

        The death knell came about when he hired Robert (Bob) Rubin straight out of the Secretary Treasurer position in the Clinton administration, and ex-President Gerald Ford.

        One to represent his interests in Congress on the Republican side; the other on the Democrat side.

        He also came close to being indicted criminally. I’d love to know some of those details. He is said to have narrowly escaped those charges.

        Sandy Weill was also the first person in Wall Street (such a leader) to have his own in-house public relations staff. This is in the late 1960s. Worth mentioning, because it is a mystery to me how his name gets only a wee mention occasionally in all of these books that have been written on Wall Street crimes.

        1. René

          Okay, that’s interesting I didn’t know that he was behind that single-handedly. Well, his PR staff did a good job hiding his name… he is also not in the picture with Al Greenspan :-)

        2. LeeAnne

          He practically invented (scuse, re invented) the no competition ‘free market’ in finance when his merger, the biggest in history at that time, was up and running a couple of years before it was possible in law.

          Who, knowing he owned the law-making process, would interfere during that time period -like make a competitive bid?

  2. Middle Seaman

    Certain assumptions made by Madrick may be replaced with a more solid foundation. Compared to Europe that went through a long political evolution, the US telescoped almost a thousand years into about 200. As a result, feudal forces such as the Robber Barons, the military industrial complex and lately the banks have a constant presence and exceptional power throughout our history. Opposing them was the liberal movement with its meager resources. That is a fight difficult to win. FDR won because the feudal forces were lying on the canvass face down. Later, they dusted themselves of and resumed where they stopped.

    The American liberal movement was corrupted by the affluence that started in the 70s-80s. The best evidence is the election of Carter and Obama neither of which is liberal. As affluence increased feudal forces gain more power and liberal continued to break up.

    Obama’s election is a great testimony to the liberal collapse. It was clear that Obama is lacking, the American hysterical survivors of the European avangarde, i.e. progressives, have long been off anchor. They totally abandoned the blue color, i.e. unions, became rigid about any change and adopted the European line on Palestine without caring about its racial source.

    In the last twenty year, we basically unopposed feudal forces control the media, congress, the judiciary and the executive branch. Throwing small pebbles at them are a bunch of clowns, i.e. liberals, that consider themselves serious.

  3. LeeAnne

    Skippy, I really wish you would stop doing this. The comment you are addressing is certainly arguable, but your dismissal is hardly warranted. And given your propensity for short under punctuated misspelled punchy lines, albeit with intelligence and wit that I have enjoyed over these last couple of years, and would sorely miss, the person you are attacking has much more to offer in the area of political economy than anyone I’ve read on this blog so far.

    And, furthermore, it is my experience that he has been unfailingly polite to all ho wish to comment on his ideas.

    You, on the other hand, seem to have come out of the closet on the side of this system that has thoroughly imprisoned and declared war on its own population -news black outs and all -reporters by invitation only.

    For all you know, several Wall Street demonstrators are being interrogated for their peaceful demonstrating as we speak, and the rest of them on no fly lists and worse. Would you know? Would anyone know?

    I’m very aware of your intelligence and experience in areas I haven’t a clue about, but nevertheless this behavior hurts your credibility.

    1. Skippy

      Attempter has one gear, its everyone’s fault but his / hers, with out sin. Btw nice job of painting me with the same broad brush flourish his / hers employ, creditability, for not being part of the heard. A bell rings!

      “the person you are attacking has much more to offer in the area of political economy than anyone I’ve read on this blog so far.” —– me here, in your book, do not dictate to me please for I would not to you.

      “You, on the other hand, seem to have come out of the closet on the side of this system that has thoroughly imprisoned and declared war on its own population -news black outs and all -reporters by invitation only.” ——me here, what a projection, closets and all, fuk me I’m imperialistically gay or something now.

      “polite to all ho wish to comment” – *And given your propensity for short under punctuated misspelled punchy lines.*… me snicker.

      WTF wall st protestors[?], how in the hell do you drag that up in the conversation.

      Skippy…This has nothing to do with you. Attempter can answer my questions or refuse. Now I will ask, did he ping you for back up? The voracity of both of you is on the line, who – what will it be…eh. BTW since you wish to join the party whats your back ground?

        1. Skippy

          Its atrempters turn to answer direct questions, same goes for you.

          Skippy…answer or default, gamesmanship is not an answer. I’ve been places where this kinda stuff will get you a big hole in your head, I don’t play that game. Answer or leave the field, your[s veracity depends on it, side tracking only proves my point.

          1. Frank Powers

            Skippy, you’re acting ridiculous. Sorry I have to point it out to you, but someone should, and, well, you are.

          2. attempter

            I’ve answered all questions, many times. Look it up.

            You, OTOH, absolutely refuse to answer why you flipped out when I and other several other commenters criticized Big Telecom.


            (This all bizarrely started there, for anyone wondering.)

            How did that offend your book?

            A thousand anti-bank, anti-Big Ag, anti-health insurance racket, etc. references, no problem. Anti-Comcast, and he flips his lid. Hmm…

    2. Yves Smith Post author

      In all honestly, Attempter “unfailingly polite”? You are kidding, right? Just go up in the thread, he calls Skippy a “stalker”. There is counterevidence right here.

        1. Yves Smith Post author

          You’ve just done it again. You accuse Skippy of having some sort of mercenary motive (which is an an ad hominem with no supporting evidence, BTW, his comment on the earlier thread was on the Internet generally, not Comcast in particular). And his pattern is consistent. He is challenging your black and white, Godlike posture. And unlike yours, his tone is not aggressive.

          You may not his comments, but you are the one who turn his questions and comments into a fight. You could either engage him or ignore him, but you escalate this and then try to argue that he is the one who made it a fight, when the evidence does not support that. I have readers who REGULARLY try to pick fights with me (Peripheral Visionary, Dan Duncan, Rebel Economist, to name a few) and I don’t engage them most of the time. Their tone is combative and Skippy’s is not, at least at the outset. And unlike you, I pick and choose whether or not to engage people who like to question or spar with me.

          This is a consistent pattern across the links you’ve presented to support your “case”.

  4. Melody

    Greenspan: As a Fed chairman, he was intent on suppressing inflation above all other things

    Amazingly, he suppressed inflation–particularly workers’ wage inflation, but did nothing to rein in management’s wage inflation.

  5. ep3

    i would add in the move to “corporatize/privatize” every part of our lives. And the raising of corporations as stronger citizens than ppl. That will continue to hang heavy around our necks.

  6. Susan the other

    How did Greenspan manage to insinuate himself into the economic dialog in the first place? He was just faking it from the get go. Now that everything is in a shambles and we are doing all these post-mortems one thing that is really becoming obvious is that we never had a plan in the first place. All life forms have a plan; it is usually in their dna. And DNA is such a conservative biological mechanism it does not allow changes to be too radical. It always supports survival. We’ve tried to fudge our economy by calling capitalism Darwinian. But I really do not think nature is that destructive. There wouldn’t be any life left on the planet. And I think the one thing screaming at us now is pretty close to a survival imperative: get a fucking plan.

  7. bigsurtree

    Madrick observes in illustrating the foundation of individualism in America that …the availability of land and resources enabled many Americans to make it on their own… followed up by …the return to individualistic anti government attitudes did have profound antecedents in the national character…

    Wow, what a perverted twisting of history. The national government worked its ass off making indigenous indian land available for “the white man”. There were forts throughout
    all the territories and government policies in place to
    carry out racist, genocidal policies.

    White farmers were always lobbying congress to get the red men out of the way e.g. California politics after becoming a state is filled with lobbying efforts to get the indians off of their lands.

    The notion of the rugged individual in the westward movement
    making it on his own is fantasy promoted by the likes of Currier and Ives and Disney. Most of the small farmers were
    constantly in fear of their bankers foreclosing on account of debt; all of them extorted by the railroads.

    Reading original source material (newspapers of the 19th century) tells a totally different story. Lot more complex!

    1. PhilJoMar

      Ah..the nineteenth century. Good points bigsurtree. As an undegrad at Edinburgh Uni I took a course in US history and was amazed at some of the historical forces that falsified the rugged frontier individualist ideology. Of course one can’t state everything in an interview but if you’re going to invoke progressivism and the late 1800s you might want to think about the Knights of Labour, the Grange, the Farmers Alliance and the People’s Party. Lawrence Goodwyn’s Democratic Promise is one of the most inspirational books I’ll ever read. I’m pretty sure he will have been savaged by those on the side of the usual suspects and those with honest historically based differences but this showed a side of american life that was easy to love from a European perspective (there’s lots more but the Alliance’s activism beats Obama’s small platoons hands down).
      Yves…I am amazed at your patience with everyone on this blog. When so many feel unable to get their views heard, your willingness to engage with your ‘followers’ does you real credit.

  8. Aquifer

    “I find it hard to believe that more policymakers, editorial writers and pundits don’t ask whether Wall Street should have as central a purpose in our economy as many take for granted. We should be asking whether Wall Street – that is, the financial community – is justified at all in its present size.”

    Was glad to see this …
    It has seemed to me for awhile that we would all be better off if Wall Street sort of disappeared – if the stock market, say, dropped back to < 5000, and became what it seems to me it should be – a venture enterprise for folks who have money to play with instead of what it has been made in to – the backbone of "everyman's" financial hopes via IRAs and 401Ks. As soon as we were sold on the idea of "investing" in it, we became obsessed with it's well being to our, IMO, eternal misfortune …

    His description of Friedman's style also, I think, is important – "His very accessible and even compelling book, Capitalism and Freedom, was influential partly because it was so understandable. He seemed to provide an answer….he gave the movement intellectual credibility and he was wonderfully articulate, to boot."

    This is key – folks have to able to understand this stuff!
    My background is in a field, medicine, that glories in jargon – it helps to justify our "vaunted" position as "experts", but the simple fact is if it is to be useful at all to the very folks we are supposed to be "helping" they have to be able to understand what the heck we are talking about! I would draw pictures and try to use analogies and language that patients could understand.

    That is why i do appreciate books, articles, etc that eschew a lot of the specialty jargon that is used in fields I have no particular expertise in – why i really like, e.g, works by Ha-Joon Chang. I suppose some elite in the field could consider this "dumbing down" but I think the author does a service when he points out that Friedman succeeded in giving his ideas "legs" by being able to infect the public consciousness with them –

    I am a big fan of this blog – but do get frustrated when i get caught up in the jargon, though I am not a "stupid" person. I have occasional "aha" moments, hopefully there will be more and more of them, but i have also had moments, perhaps a fair number, when i have thought "shucks, why didn't he/she say that ages ago!"
    Have heard it said maybe it was Chang, can't remember, that a lot of this stuff is "common sense" – and when he explains it it does indeed resonate with my own "common sense" reflections …

    I run on like this because i think perhaps the one lesson economists should take from Friedman if they want their stuff to have an impact, is to be "understandable", because it is the "mood of the public" that will have a great deal to with, if not be dispositive of, which economic road we travel …

    1. Tao Jonesing

      What Madrick apparently does not know is that Friedman’s Capitalism and Freedom was the Americanized (read “dumbed down”) version of Hayek’s The Road to Serfdom. Friedman’s popular work was, at its heart, propaganda specifically designed to be accessible.

      1. Aquifer

        I cannot say that i am familiar with Friedman’s works, per se, and am certainly not a fan of his ideas as they have been presented to me. Nor do i mean to say that I will grab any idea that i can “understand” – there are plenty of ideas i understand quite well and eschew completely.

        What I was commenting on was what appeared to me to be Maddrick’s observation that a good deal of Friedman’s “genius” in influencing the popular discourse was his ability to translate his economic proclivities, if you will, into language, terminology, “memes”, whatever, that struck a cord with a significant number of people.

        It seems to me that perhaps the “left” needs to make a greater effort to do the same … I see signs of it, Baker, Rick Wolff, Chang. Perhaps their thinking is not considered “rigorous” enough to be discussed or argued, i don’t know; as i said, i am (obviously) not an economist, but considering the fact that the concept of “economics” and it’s theory has such a strong hold on people’s imaginations that those who claim expertise in the field are able to influence decisions that have profound effects on fundamental aspects of our lives – it would seem that it would behoove lefty economists to “dumb down” as much as necessary to keep the Friedmanites at bay, and certainly out of the kitchen ….

  9. Hugh

    Jeff Madrick manages to describe 35 years of kleptocracy without ever mentioning kleptocracy. Similarly, his descriptions of those involved seem curiously at odds with his title The Age of Greed. I mean Carter is a conservative, but he is not greedy. Reagan is a mythmaker, but he is not greedy. Clinton “turns” the Democratic party into the party of Wall Street, but he is greedy. Greenspan is an ideolgue, but he is not greedy. Obama, barely mentioned, is an ineffective re-regulator, but he is not greedy. I would love to ask Madrick how or why he thinks it came about that all of these non-greedy guys just happened to work together to create his Age of Greed.

    You see this is where the concept of kleptocracy is important. It ties these guys and their policies to their product, not an Age of Greed but an Age of Looting. Otherwise we are faced with this bizarre disconnect between the policies of these and the greed of others.

    1. Hugh

      That should read: Clinton “turns” the Democratic party into the party of Wall Street, but he is not greedy.

    2. Tao Jonesing

      Jeff Madrick manages to describe 35 years of kleptocracy without ever mentioning kleptocracy.

      “Kleptocracy” is a bad word because it immorality and even criminality. Since economics are amoral and all of the decisions under discussion are economic ones, we cannot and should not imply immorality (let alone criminality). Really, these were just a bunch of people pursuing their own best interests and things got messed up. There’s nobody to blame anywhere it sight. Shit just happens sometimes, don’t you know. (And yet Madrick and Pilkington admit a political movement of which Friedman was part, a movement that stood on its morality, which has proven to be the morality of kleptocracy.)

      1. Aquifer

        Thank you for pointing that out. It has always amazed me, fool that i am, that we so easily accept a business “ethic” that has nothing to do with ethics, let alone morality of any stripe. Actions which we would condemn, punish, or at least avoid in just about any other aspect of our lives, if done in the name of business are accepted with a shrug – “well, if it’s good for business, I guess we’ll have to accept it …” The fact that “morality has nothing to do with it” is so often considered an acceptable riposte to any complaint of “immoral” behavior on the part of a corporation says a great deal about why we are where we are …

  10. Mookie

    But there was nothing in Friedman that wasn’t already fundamentally in Adam Smith.

    Really? I was under the impression that Smith’s conception of a free market was a well-regulated market free of monopoly and excessive rent. Friedman turned this on its head and said a free market is a market free of any regulation. Have I got this wrong?

      1. rotter

        Maybe he was comparing the unjustified faith in the free market to correct imbalances and solve problems(watch the kids, make dinner, mow the lawn,remember your aniversary etc., etc.,) of both smith and greenspan. Adam Smiths magical “invisible hand” and all that. To be fair, smith lived and wrote almost 250 years ago,invisible magical forces and utopian philosophies were widely believed in. More belived in than not, back then really. But greenspan has no excuse, other than his pathological,invinsible self interest, and his suicidal proximity to the flaming, soul melting, hotness, the blazing white dwarf star of, of….um…ayn rand (?!)

    1. Yves Smith Post author

      Madrick is technically correct, but his statement is misleading and gives Friedman a free pass. From ECONNED:

      In 1776, Adam Smith published The Wealth of Nations. In it, he argued that the uncoordinated actions of large numbers of individuals, each acting out of self interest, sometimes produced, as if by “an invisible hand,” results that were beneficial to broader society. Smith also pointed out that self-interested actions frequently led to injustice or even ruin. He fiercely criticized both how employers colluded with each other to keep wages low, as well as the “savage injustice” that European mercantilist interests had “commit[ted] with impunity” in colonies in Asia and the Americas.

      Smith’s ideas were cherry-picked and turned into a simplistic ideology that now dominates university economics departments. This theory proclaims that the “invisible hand” ensures that economic self-interest will always lead to the best outcomes imaginable. It follows that any restrictions on the profit-seeking activities of individuals and corporations interfere with this invisible hand, and therefore are “inefficient” and nonsensical.

      According to this line of thinking, individuals have perfect knowledge both of what they want and of everything happening in the world at large, and so they pass their lives making intelligent decisions. Prices may change in ways that appear random, but this randomness follows predictable, unchanging rules and is never violently chaotic. It is therefore possible for corporations to use clever techniques and systems to reduce or even eliminate the risks associated with their business. The result is a stable, productive economy that represents the apex of civilization.

      This heartwarming picture airbrushes out nearly all of the real business world. Yet uncritical allegiance to these precepts over the last thirty years has produced a world in which corporations, especially in finance, are far less restricted in their pursuit of profit. We show in this book how this lawless environment has led the financial services industry to pursue its own unenlightened self-interest. The industry has become systematically predatory. Employees of industry firms have not confined their predation to outsiders; their efforts to loot their own firms nearly destroyed the industry and the entire global economy. Similarly destructive behavior by other players, often viewed through a distorted lens that saw all unconstrained commercial behavior as virtuous, added more fuel to the conflagration.

      Some economists have opposed this prevailing ideology; indeed, comparatively new lines of inquiry focus explicitly on how economic actors can fool themselves or others into making poor, even destructive, choices.

      But when the economics profession has used the megaphone of its authority to dominate discussions with policymakers and the public, it has spoken with one voice, and the message has been the one described here.

      1. Mookie

        So the idea is that Friedman just cherrypicked and amplified the parts of Smith that fit his ideology, right? Okay, I can see that, but I want to focus on the changing definition of the “free” in free markets, because I think Friedman really perverted Smith’s thinking.

        My understanding is that Smith’s theory was born as his society rose out of feudalism. He saw that a market free of monopoly and “excessive rent” allowed for more players, more competition, and more benefits for all players. In other words, the ‘free’ in Smith’s ‘free markets’ emphasized a market free of monopolies, free of excessive proft taking (this is what’s meant by excessive rent, right?), and free of excessive barriers to entry.

        Didn’t Milton Friedman turn this on its head and say that a free market is a market free of regulation? I’ve never read Friedman, but that’s the impression I get from his modern day acolytes who run the country. In Smith’s day, monopolies were created/awarded by government, but in our day they arise out of deregulation (reasonable people can disagree on this, but I think it’s fair to say that deregulation has created the TBTF monstrosities that are an existential threat to our system).

        In short, I think it’s important for people like us to emphasize what ‘free market’ originally meant: a market that is free of monopoly, excessive rent, and high barriers to entry. These conditions will create a market that benefits more people. It sounds counterintuitive to our modern ears, but the past 30 years of following Friedman’s theory have taught us that you can’t have a truly free market without effective regulation.

  11. Jim

    As the market/state has consolidated its power and we have moved into a post-democratic era it is important to take a closer look at Jeff Madrick’s interpretation of “the role of community and government in America….”

    The “Progressive” community continues to argue(directly and indirectly) that a national unitary state is the most appropiate vehicle for resolving our problems and that the drive toward such an outcome was embedded in American society almost from its beginning.

    This is true in the sense that over the past 230 some years there has been a gradual dissolution of federalism into statism.

    If one assumes that federalism, in part, is a political structure which allows culturally diverse groups of people with radically differenct values, traditions, and customs to live together without attempting to destroy each other then a key reason for the existence of federalism is precisely to mediate conflict among its constituting units–to guarantee the local autonomy of its units.

    I believe it is worthwhile to take a more careful look at the Anti-Federalist critiques of our Constitutional Convention and the nationalizing objectives of our Constitution in order to discover a more authentic federalism.

    I would argue that 13 colonies were the original self-governing entities which agreed to federate–that authorized a federal government.

    The more radical federalism of the Anti-Federalists was intended to enhance popular power, while the federalism of the Federalists (Madison, Hamilton, Jay etc.)was designed to frustrate its expression. For Madison, the separation of powers at the national level was the centerpiece of “federalism” even while this new central government was itself to draw decisive power away from localities.

    The anti-Federalists disagreed with the Federalist contention that one great civil society was the best kind of arrangement. They saw the viability of democracy to be dependent on that of small relatively homogenous, self-governed communities, in which a large proportion of the population would directly engage in decidely non-unitary policy making.

    For example, in Issac Kramnick’s “The Federalist Papers” he describes the Massachusetts ratifying convention in 1788 were one of the delegates complained “…that the ratification process was too far removed from the people at large” and he voiced the special cry of Western Massachusetts commitment to radical home rule. The Constitution, he declared “ought to have been sent to the several towns to be considered by them. My town considered it for several hours, and after this there was no one in favor.”

    The Progress/liberal left needs a political theory of the state (i.e. perhaps a reconstructed federalism) as part of a program for reconstructing democracy–a merging of populism with radical federalism–which could then provide a powerful political/cultural vision that would truly threaten our contemporary elites.

    1. JTFaraday

      Oh boy, are you fighting an uphill battle. Much of the “progressive/ liberal left” is still living under the benign auspices of the (Thurgood) Marshall Court and ready to run you out of town on a rail for trying to bring back slavery.

      (End of liberal thought process).

    2. attempter

      The Progress/liberal left needs a political theory of the state (i.e. perhaps a reconstructed federalism) as part of a program for reconstructing democracy–a merging of populism with radical federalism–which could then provide a powerful political/cultural vision that would truly threaten our contemporary elites.

      But they don’t want that. They want the Leviathan State, and they want corporate capitalism. They want elites, and they want to be among those elites, or at least to lick their boots.

      A truly federalist movement will have to arise from other roots.

      1. Yves Smith Post author

        How many people do you know in politics? You’ve give an accurate picture of the Democratic hackocracy, but that is not the “Left”. The left is far more fragmented, than you indicate, and the picture is confused by a lot of Third Way (center right Rubinite Dems who are leftist only on social issues, like gay rights) claiming to be leftist when they aren’t. The leftists I know are decidedly anti-coporate and discuss openly and often how corrupt the elites are.

  12. Tao Jonesing

    Based on this interview, the emerging conventional “progressive” wisdom is based on an exceedingly poor understanding of history and a desire to placate the “conservative” foe. Good luck with that.

    1. Yves Smith Post author

      That is a VERY apt summary of my beef with Madrick, he is far too conciliatory toward people he should be openly opposing if he were to uphold his professed views. But “progressives” span a large spectrum of behavior. Sadly, it is the tamer ones and the fauxgressives who get media attention.

  13. MyLessThanPrimeBeef

    Since we are talking the history of greed, it would be interesting to see a list of the top 100 greediest entities of all time.

  14. Jim

    Call me crazy, but there seems to be such an historical opportunity now. In the age of instant communication we have the technological infrastructure for direct democracy. With the increasing corruption of Big Capital, Big Government and Big Bank there is a tremendous opportunity to create and advocate a kind of alternative, small productive proprietorship in both the economic and financial spheres. In fact, much libertarian and even paleoconservative agendas could co-exist with a left committed to a reconstruction of local and regional community life as well as radical federalism.

    Such a coming together of supposed political enemies would be the surprise political realignment of the 21st century and could be the the first step towards a postmodern populism.

    1. PhilJoMar

      Jim…you are spot on. The future is local. But we have to be able to look each other in the face when we meet. Huge wealth inequalities can’t go on. As Burns said ‘A man’s a man for a’ that’…

      1. Ian Ollmann

        I fear such a future. The Romans had it right. Rule by the mob is not good!

        We have some direct democracy in California. It takes 50% + 1 vote to change the California constitution, but 2/3 majority to raise taxes. Any method Californians can contrive to hamstring the legislature, they take. The result is ineffectual, broken government. To get stuff done, they have to take it to the voters.

        It has been said that any man who serves as his own lawyer has a fool for a client. I think it must go double for legislators. Direct democracy in California has been shameful! We have the most unequal property tax system in the country, with two neighbors with identical houses, one pays an order of magnitude more than the other. You can thank the voters for that. We vote to deprive gays and lesbians equal treatment under the law. Appalling!

        I’m all for good government, but to get there, we neither want legislators in the paid pockets of special interests, nor do we want rank amateurs who haven’t a clue what they are doing! It is time for the technocracy to evolve.

  15. Thorstein

    I’m great admirer of Jeff Madrick but this interview is not good.

    Philip Pilkington does not appear to be familiar with either of Madrick’s voluminous writings nor with his latest book. I recommend NC readers become familiar with Madrick’s thinking here:

    In particular, I recommend reading:

    Madrick wrote a NYT oped in April 03: “A return to the sluggish economy of the 1980’s and early 1990’s is not only possible but likely.”

    As per the legacy of the 70s, read Nicholas Lemann’s July 91 essay: “How The Seventies Changed America”:

    For a longer treatment of that topic, I recommend Jefferson Cowie’s excellent “Stayin’ Alive: The 1970s and the Last Days of the Working Class” (2010).

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