Mark Ames: Why Finance Is Too Important to Leave to Larry Summers

Yves here. It had looked as if Larry Summers might finally be fading from public life. He’d lobbied hard years back to be appointed to be head of the World Bank, and more recently, Fed board member and even Fed chair.

But even though some neoliberals are sober enough to keep Summers well away from a formal position of power, unfortunately he still wields a great deal of influence. Summers is one of the leaders of the hawkish view of our current inflation, that it’s due to overly stimulative fiscal and monetary policy, as in too much demand. Accordingly, he’s called the Fed’s policy rates to be in the 4% to 5% range. And he’s getting more play for his “kill the economy to kill inflation” stance. The second story at Bloomberg now is History Shows No Example of Hiking US Rates Too Fast, Summers Says.

In fact, as Servaas Storm showed in a recent paper, carefully parsing data, our inflation is due largely if not entirely to a reduction in supply: the impact of Covid on the workforce and supply chains and sanctions blowback.

So Mark Ames’ hardy perennial, which he wrote for our first fundraiser eleven years ago, remains an important warning.

While this is our analogue to Christmas staples like The Grinch That Stole Christmas or It’s a Wonderful Life. Ames’ piece is the antithesis of sappy. Ames also explains one of the reasons the left is so bad at power: its adherents saw finance as grubby and thus not worth of study.

And in the spirit of Christmas coming early, we hope you’ll leave something nice in our stocking, um, Tip Jar!

By Mark Ames, author of Going Postal: Rage, Murder and Rebellion from Reagan’s Workplaces to Clinton’s Columbine.

If you’ve been reading Naked Capitalism for any period of time without giving back in donations—and most of us have been hooked from the time we discovered Yves Smith’s powerful, sharp voice and brilliant mind—then you you’ve been getting away with murder. Naked Capitalism is that rare blog that makes you smarter. Smarter about a lot of things, but primarily about Yves’ area of expertise, finance.

By a quirk of historical bad luck, the American Left has gone two generations without understanding finance, or even caring to understand. It was the hippies who decided half a century ago that finance was beneath them, so they happily ceded the entire field—finance, business, economics, money—otherwise known as “political power”—to the other side. Walking away from the finance struggle was like that hitchhiker handing the gun back to the Manson Family. There’s a great line from Charles Portis’s anti-hippie novel, “Dog of the South” that captures the Boomers’ self-righteous disdain for “figures”:

He would always say—boast, the way those people do—that he had no head for figures and couldn’t do things with his hands, slyly suggesting the presence of finer qualities.

That part about the hands—that would refer to the hippies’ other great failure, turning their backs on Labor, because Labor didn’t groove with the Hippies’ Culture War. So the Left finds itself, fifty years later, dealing with the consequences of all those years of ruinous neglect of finance and labor—the consequences being powerlessness and political impotence.

That’s why Yves Smith is so important to anyone who cares about politics and the bad direction this country is taking. In 2008, the Left suddenly discovered that although it could bray with the best of ‘em about how bad foreign wars are, and how wrong racism and sexism an homophobia are, it was caught completely and shamefully by surprise by the financial collapse of 2008. The ignorance was paralyzing, politically and intellectually. Even the lexicon was alien. Unless of course you were one of the early followers of Yves Smith’s blog.

It wasn’t always this way.

Back in the 1930s, the Left was firmly grounded in economics, money and finance; back then, the Left and Labor were practically one. With a foundation in finance and economics, the Left understood labor and political power and ideology and organization much better than the Left today, which at best can parry back the idiotic malice-flak that the Right specializes in spraying us with. We’re only just learning how politically stunted and ignorant we are, how much time and knowledge we’ve lost, and how much catching up we have to do.

Which is why Yves Smith’s Naked Capitalism is one of the 99%’s most valuable asset in the long struggle ahead: She is both analyst and educator, with a rare literary talent (especially for finance). One thing that’s protected the financial oligarchy is the turgid horrible prose that they camouflage their toxic ideas and concepts in. Yves is one of the rare few who can make reading finance as emotionally charged as it needs to be.

Naked Capitalism is our online university in finance and politics and ideology. Whereas other online universities are set up to turn millions of gullible youths into debt-shackled Wall Street feeding cows, Naked Capitalism is the opposite: Completely free, consistently brilliant, vital, and necessary, making us smarter, teaching us how we might one day overthrow the financial oligarchy. One other difference between Naked Capitalism and online university swindles: (Stanley Kaplan cough-cough!) Your donations won’t end up paying Ezra Klein’s salary.

Which brings me back to my whole “Shame on you!” point I was trying to make earlier. When it comes to fundraising, nothing works like shaming. That’s how those late-night commercials work: You’re sitting there in your nice comfortable home, and then suddenly there’s this three-legged dog hobbling into its cage, with big wet eyes, and then some bearded pedophile comes on and says, “Poor Rusty has endured more abuse and pain than you can ever imagine, and tomorrow, he will be gassed to death in a slow, horrible poison death chamber. And you—look at you, sitting there with your Chunky Monkey and your central heating, what kind of sick bastard are you? Get your goddamn Visa Mastercard out and send money to Rusty, or else his death is on your head. I hope you sleep well at night.”

Now I know that this sort of appeal wouldn’t work on the Naked Capitalism crowd—too many economists here, and as everyone knows, you can’t appeal to economists’ hearts because, well, see under “Larry Summers World Bank Memo”… I can imagine Larry watching that late night commercial with the three-legged dog, powering a 2-liter bottle of Diet Coke and devouring a bag of Kettle Salt & Vinegar potato chips, calculating the productive worth of the three-legged dog, unmoved by the sentimental appeal. Larry grabs a dictaphone: “Item: How to end dog-gassings? Solution: Ship all three-legged stray dogs to sub-Saharan Africa. Africans won’t even notice. Dogs saved. Private capital freed up. Problem solved.”

So some of you have no hearts, and some of us have no shame. But we all do understand how vital Naked Capitalism has been in educating us. I’m sure that the other side knows how dangerous a site like this is, because as we become more educated and more political, we become more and more of a threat.

The oligarchy has spent decades on a project to “defund the Left,” and they’ve succeeded in ways we’re only just now grasping. “Defunding the Left” doesn’t mean denying funds to the rotten Democratic Party; it means defunding everything that threatens the 1%’s hold on wealth and power.

One of their greatest successes, whether by design or not, has been the gutting of journalism, shrinking it down to a manageable size where its integrity can be drowned in a bathtub. It’s nearly impossible to make a living as a journalist these days; and with the economics of the journalism business still in free-fall like the Soviet refrigerator industry in the 1990s, media outlets are even less inclined to challenge power, journalists are less inclined to rock the boat than ever, and everyone is more inclined to corruption (see: Washington Post, Atlantic Monthly). A ProPublica study in May put it in numbers: In 1980, the ratio of PR flaks to journalists was roughly 1:3. In 2008, there were 3 PR flaks for every 1 journalist. And that was before the 2008 shit hit the journalism fan.

This is what an oligarchy looks like. I saw the exact same dynamic in Russia under Yeltsin: When he took power in 1991, Russia had the most fearless and most ideologically diverse journalism culture of any I’ve ever seen, a lo-fi, hi-octane version of American journalism in the 1970s. But as soon as Yeltsin created a class of oligarchs to ensure his election victory in 1996, the oligarchs snapped up all the free media outlets, and forced out anyone who challenged power, one by one. By the time Putin came to power, all the great Russian journalists that I and Taibbi knew had abandoned the profession for PR or political whoring. It was the oligarchy that killed Russian journalism; Putin merely mopped up a few remaining pockets of resistance.

The only way to prevent that from happening to is to support the best of what we have left. Working for free sucks. It can’t hold, and it won’t.

There are multiple ways to give. The first is here on the blog, the Tip Jar, which takes you to PayPal. There you can use a debit card, a credit card or a PayPal account (the charge will be in the name of Aurora Advisors).

You can also send a check (or multiple post dated checks) in the name of Aurora Advisors Incorporated to

Aurora Advisors Incorporated
164 Peachtree Circle
Mountain Brook, AL

Please also send an e-mail to yves@nakedcapitalism.com with the headline “Check is in the mail” (and just the $ en route in the message) to have your contribution included in the running tally of donations.

So donate now to Naked Capitalism. If you can’t afford much, give what you can. If you can afford more, give more. If you can give a lot, give a lot. Whether you can contribute $5 or $5,000, it will pay for itself, I guarantee you. This isn’t just giving, it’s a statement that you are want a different debate, a different society, and a different culture.

Who knows, maybe we’ll win; maybe we’ll even figure out a way to seal Larry Summers in a kind of space barge, and fire him off into deep space, to orbit Uranus for eternity. Yves? Could it be financed?

Print Friendly, PDF & Email

17 comments

  1. Tom Pfotzer

    Great post, Mark, and it ties right in with today’s other post on the Culture’s Inability to Grasp the Present.

    A few key points you made – e.g. the “left” opted out of econ, finance, etc, and the centralization (oligarchs) crushing diversity are really valuable insights.

    The big problem with the hippies – and more broadly the “left” – is that they didn’t develop the economics to support their values. Their values were pretty cool, but they never quite figured out how to make the living necessary to support those values.

    So, what we did instead was to shoe-horn our values into roles that the prevailing economic system would pay for. And now, we’re left with pretzel-shaped values, and progressively fewer jobs that pay a living wage for those values. We got nothin’.

    The way out of this mess is to get good at innovation.

    Economics is the fusion of what the natural world offers (resources), what we know how to do (technology) and what we’re motivated to do (needs and wants). That fusion delivers your current edition of an “economy”.

    Innovate what?

    New ways to make a living while holding on to the values that will go the distance. Values like creativity, the priceless joy of the natural world, co-operation and team- work, building a commons that lifts all boats…that sort of stuff. Values that can carry a society the full distance.

    As I mentioned in the thread about Culture losing it’s mojo, I see lots of little flashes and glimmers of change happening among the 20-30s crowd in the local-production scene. I’m seeing some pretty hard-headed strategy, some technical innovation, and a pretty fair amount of team-work happening. They are actually developing new ways to make a living while holding on to some great values.

    Mark said: “The only way to prevent that [loss of cultural and economic independence] from happening to is to support the best of what we have left. Working for free sucks. It can’t hold, and it won’t.”

    No, Mark, it certainly will not hold.

    This principle applies not just here at NC, and at the journalistic level, but more broadly.

    We don’t have very many good mechanisms to route econ benefits to the creative, potent, heavy-lifters that are contributing mightily to the commons. This is a real problem, because we are not feeding the producers. We’re feeding the middle-men, not the creators, and the creatives, the iconoclasts, the fearless pioneers .. are going to starve.

    We need to lay some serious attention on that fact. We need to feed those producers, or we’re going to be doing bullshit jobs and eating vanilla pudding.

    To reinforce Mark’s core point, NC pulls their weight as a source of ideas and inspiration. They’re a “producer”. They build the commons.

    Feed the producer.

    Reply
    1. Jj

      Hippies and the left would’ve been happy/user with New Deal regulations. It’s destruction is what caused the collapse of political institutions, democracy itself. And, from an economic perspective the elimination of the industrial base. No cartwheels of excuses or theoretical proposals can change that.

      Reply
  2. chukjones

    Mark, I’m all in with you support for NC! That said, I will take issue with “the left-hippies abandoning labor”. What “left” are you referring to when you blame “hippies” for abandoning the labor movement? I was an anti-war, anti-nuke and pro union activist. Our groups never deserted labor, Regan and the following neoliberals (both parties, yes) furthered policies to reduce labor influence. Enough hippie punching, please.

    Reply
    1. HotFlash

      Labor and the hippies were not always at odds. The SDS’s very socialist Port Huron Statement was drafted in 1962 at the AFL-CIO Camp, a park and campground on Lake Huron for Detroit auto workers and their families– Lakeport, actually, a bit north of Port Huron proper. Not a coincidence, I think, but a result of ties and contacts. Hippies and labor were tight back then, but labor and the Deep State had been at odds for some time. Commies, you know. Or something. The AFL president at that time, and for some time before and after, was the visionary and very inconvenient Walter Reuther. If you didn’t click on the link, Mr. Reuther’s chartered Lear Jet fell out of the air. The camp now appears to be abandoned and the sign is falling down from rot.

      The last rift betw labor and ‘hippies’ was between the union membership, mostly middle and later aged WWII vets, and the next generation (“those kids” or “those long-haired kids” or well, you know), whether the hippie pacifists or the Viet Nam vet losers (it’s paywalled but if you read fast you can get the gist before the hammer drops).

      Why did it go this way? I don’t know, got no info on that, but looking back, I wonder if there was some planning by somebody going on.

      Reply
      1. Harold

        I don’t think SDS can be correctly categorized as Hippies. Hippies were interested in life-style and appearance. Long hair, beards, granny glasses, and so on. “Turn on, tune in drop out”, was that the slogan? SDS was involved with achieving political change, opposing imperialism (the Vietnam War), draft resistance, racial justice and arms control. That’s what I remember, at any rate.

        Reply
        1. HotFlash

          With due respect, Harold, I was what They called a hippie. We called ourselves freaks. We read Ramparts and alternative press, we were anti-war, pro-civil rights, some names you might know from those times are Tom Hayden (I think his head got turned by $$$ and Jane Fonda eventually, but he and Casey were very OK back then) and Rob Urie who was a regular at my coffeehouse back in the day. Look ’em up. We freaks were solid with labor and many of us were workers but labor, esp after St Walter’s plane fell out of the air (second try wrt small planes, plus a shotgun blast thru his kitchen window — third time’s the charm, I guess) had no time for us.

          To dismiss our thought and work as mere fashion (love beads? granny glasses? really!) is to follow the official talking points. Oh, and the HUGELY inflated $$$ values of drug busts. “Police seized over one million dollars of illegal drugs in a raid on a local drug haunt last night…” Get serious, people, Fox couldn’t have sold, let alone financed, more than $2,000 worth of stuff in our little town. The Big Boys in town were the mafia, and they were never touched by our local PD. Perhaps you only met plastic hippies from the suburbs who were slumming, or Hollywood hippies on TV?

          Reply
          1. Harold

            The Counterculture was a big tent. “They” called you a hippie, but you and your friends called yourselves “freaks”. (The freaks may have been solid with labor but labor didn’t return the compliment.) Before the hippies there had been the beatniks and before the beatniks the “non-conformists”. I also read the “alternative” press, and also The Nation, I.F. Stone’s Weekly, C. Wright Mills, and George Seldes’ “In Fact” — Ramparts, too, which puzzled me because it seemed so uncharacteristically slick. At any rate, the Port Huron Statement was in 1962 and the Summer of Love was in 1967, when, thanks to an article by Time Magazine (an arm of the CIA?) the term “hippie” came into widespread use.

            Reply
  3. orlbucfan

    I contributed to NC the minute I could after Yves announced the fundraising. And what’s with the hippie dissing? The Boomer Lefties were into reducing human over-population, and agreeing with a lot of Native Americans that we’re all part of nature and not vice-versa. Saving the environment was brought to attention. Plus, opposing the MICC monster.

    Reply
  4. Susan the Other

    Speaking of worms… CSPAN last night another senate hearing on finance. I was comfortable thinking Yellen knew the difference between crypto and digital. But now 2 things: the hearing was all about consumer protection against the coming “central bank cryptocurrency”. Huh? Janet recently had said she was not talking about “crypto” – she was only looking at doing a central bank digital currency. But somehow the prefix wormed its way in and now she/Treasury are talking about a central bank cryptocurrency. Because we need to get up to speed fast as China and others are ahead of us with digital currencies. I can’t fathom the double speak but it sounds like crypto technology is fairly advanced and can be adapted to being digitized as a “dollar-backed crypto currency” easier and faster than creating a US digital dollar from scratch. But, clearly, the big concern is getting crypto under control, regulating it, etc. to protect consumers. And nobody is mentioning that once that is done it will no longer be very cryptic. It will, in fact, no longer be a private currency. If crypto remains private and gets commingled as “dollar-backed” it will corrupt the whole financial system. My little brain is rolling over inside my skull. I’d love to see some high-level (but plain english) explanations of how all this mass of financial contradiction is progressing. Are we gonna have dollar backed crypto derivatives fund shares being sold off to every pension fund in America? Oh the humanity!

    Reply
    1. JP

      I think what crypto and digital currency have in common is, like blockchain or credit card transactions, your every purchase will be a matter of record.

      Reply
  5. JP

    Let’s see, it’s those ageing 60’s generation PMC that run Goldman, Bridgewater, Citicorp and that’s what’s called finance. It has little to do with the economy except as a reflection. Turning the crazies loose, war with the unions and hollowing out the manufacturing capabilities of the US got going with Reagan. I don’t remember too many “hippies” voting for him. Growing up in California, back in the day, we dropped acid and smoked a lot of mota but my contemporaries managed degrees in engineering, philosophy, humanities and crewed on a nuclear sub. But you are right. I am the only one that was remotely interested in econ.

    The world is reverting to the old ways. Oligarchy is just a form of aristocracy. It has always been thus. The will of the people isn’t dead but they are afraid and will clump together behind the strongest. They will believe and impose belief. Maybe if more young people majored in history or polysci or physics instead of economics.

    Reply
    1. Susan the Other

      One piece of bedrock to cling to is the fact that originally – say sometime way before conceivable civilization took place – we all regarded one another equally. And, I assume, we also cared for each other equally. So now that all our looney “financial” loopholes of exploitation are turning out to be puffs of smoke, we will revert? I’m wondering what the evolutionary language is for reversion-to-the-sane. Will we once again, by necessity, become reliant on one another? Will we save the planet?

      Reply
  6. jailbraker

    I think Summers gets a lot of airtime now days because he was one of the early and rare economists who predicted high inflation last year when almost everyone else was saying the opposite.
    While the reasons of our current inflation wont be known and studied for years to come, one cannot deny that Summers prediction of high inflation turned out to be right through luck or clairvoyance it matters little.
    As soon as his next prediction turns out wrong, he will be forgotten by the media and we wont hear of him any longer. But if he keeps calling the right shots while inflation remains stubborn, I wont be surprised to see him at the head of the Fed given the enormous amount of airtime he gets.

    Reply
  7. Richard

    Exactly what “left” has paid no attention to finance? What about Michael Hudson, Hyman Minsky, Doug Henwood, Nomi Prins, Pam Martens, the 2 Teresa G’s,New Left Reviewers like Arrighi, Susan Strange, Gowan, Blackburn, or Stephen Wolf, Edward Wolff, Gerald Epstein, need I say more?

    Reply
  8. Richard

    Perhaps less well known but superb are Julia Ott and Greta Krippner. Even the Times had Gretchen Morgensen leaning about as far left as they would tolerate

    Reply
  9. Wukchumni

    Which brings me back to my whole “Shame on you!” point I was trying to make earlier. When it comes to fundraising, nothing works like shaming. That’s how those late-night commercials work: You’re sitting there in your nice comfortable home, and then suddenly there’s this three-legged dog hobbling into its cage, with big wet eyes, and then some bearded pedophile comes on and says, “Poor Rusty has endured more abuse and pain than you can ever imagine, and tomorrow, he will be gassed to death in a slow, horrible poison death chamber. And you—look at you, sitting there with your Chunky Monkey and your central heating, what kind of sick bastard are you? Get your goddamn Visa Mastercard out and send money to Rusty, or else his death is on your head. I hope you sleep well at night.”
    ~~~~~~~~~~~~~~~~~~~~~~
    Inspired, that.

    I was almost 5 during the summer of love and when you’re a little kid looking up askance at adults or in the case of our hippies-high school students role playing (they would have all been wearing Nehru jackets a few years prior) they often look sinister peering up at somebody’s angular chin from your vantage point down low, and I remember being especially scared of them at that point in my life, and our hippies act of rebellion was one night canvasing the neighborhood far and wide, they made off with every ‘For Sale’ sign (back in the day they were on a sign that you would stake into the lawn) and planted them all on the lawn of an unsuspecting homeowner who was away.

    Rebels…

    Reply
    1. Harold

      It was a manifestation of the commercialization of “rebellion” itself, devoid of much context, political or otherwise, if not quite the beginning, given the commercial success of the 1955 movie “Rebel without a cause.” And also market segmentation, since the targets were teenagers, basically.

      Reply

Leave a Reply

Your email address will not be published. Required fields are marked *