My state elected a looter as its senator.
Only now, a senator from a different state has introduced an anti-looting bill.
What’s a looter to do?
Elizabeth Warren’s Stop Wall Street Looting Act, which is co-sponsored by Tammy Baldwin, Sherrod Brown, Mark Pocan and Pramila Jayapal, seeks to fundamentally alter the way private equity firms operate. While the likely impetus for Warren’s bill was the spate of private-equity-induced retail bankruptcies, with Toys ‘R’ Us particularly prominent, the bill addresses all the areas targeted by critics of private equity: how it hurts workers and investors and avoids paying its fair share of taxes, thus burdening taxpayers generally.
Critics will say that Warren’s bill has no chance of passing, but that doesn’t mean it’s a wasted effort. With this bill, Warren is taking on the “value creator” myth of private equity and seeking to end or restrict their looting. This bill also has the potential to expose the falsehoods that have kept the private-equity industry from being held to account.
Of course, my senator, who became fabulously wealthy through this sort of “financial innovation”, will oppose such measures, and denounce it as socialism, while the corporate media will dissemble. Such is the nature of the financial world we live in where for the last forty years the American economy has transformed from productive to extractive. In a productive economy workers and managers prosper by making everyones life better. But the other kind of getting rich, “taking” rather than “making,” extractive rather than productive, enriching the few at the expense of the many, taking the free out of free markets, is making a mockery of our republican democracy.
Heterodox economist Michael Hudson says that this momentous transformation of the US economy was brought about by neoliberalism. He says that the US economy became the envy of the world by, “using governments’ deficit spending to build up their infrastructure, raise living standards, create housing and promote progressive taxation that would prevent a rentier class, a landlord and financial class from taking over economic management. In the financial field, they wanted governments to create their own money, to promote their own development, just like the United States does. The role of neoliberalism was the opposite: it was to promote the financial and real estate sector and monopolies to take economic management away from government.”
My senator–Mitt Romney (if you haven’t guessed by now)–became fabulously wealthy during this transition, where the financial firm he worked at–Bain Capital–employed the private equity wealth model of loading former profitable companies up with debt, looting the pension fund to pay themselves enormous fees, then walking away as the company went bankrupt and the employees were kicked to the curb.
Gonzo journalist Matt Taibbi, writing about Romney’s presidential campaign in 2012, still has the best description of Mitten’s time at Bain Capital. “And this is where we get to the hypocrisy at the heart of Mitt Romney. Everyone knows that he is fantastically rich, having scored great success, the legend goes, as a “turnaround specialist,” a shrewd financial operator who revived moribund companies as a high-priced consultant for a storied Wall Street private equity firm. But what most voters don’t know is the way Mitt Romney actually made his fortune: by borrowing vast sums of money that other people were forced to pay back. This is the plain, stark reality that has somehow eluded America’s top political journalists for two consecutive presidential campaigns: Mitt Romney is one of the greatest and most irresponsible debt creators of all time. In the past few decades, in fact, Romney has piled more debt onto more unsuspecting companies, written more gigantic checks that other people have to cover, than perhaps all but a handful of people on planet Earth.”
But that’s not how we think about the financialization of the American economy thanks to the corporate media. The business press gushed about this economic transformation and scolded anyone who raised doubts as an old-fashioned Marxist, getting in the way of the creative destruction that makes American capitalism the envy of the world. Remember the Money Honey’s, whose job was to fellate (figuratively and literally) Wall Street? They were emblematic of the looting that accelerated during the 1990’s under the watch of Bill Clinton and his financial guru’s Robert Rubin and Larry Summers.
Going forward, it will be instructive to observe how Warren’s anti-looting bill is received and described by the our political class and their corporate media handmaidens. Will Warren’s anti-looting bill open any space to discuss the financial transformation of America that’s been the leading cause of the massive increase in inequality and concomitant political unrest? Indeed, the election of Trump should put to rest any notions that there have been no consequences from such a transformation. The CIA even developed a term for such a phenomenon–blowback.
I’m pretty sure that Warren’s bill will be roundly ignored by the corporate media who will be too busy either denouncing the racism/fascism of Donald Trump and his supporters, or denouncing the identity politics and political correctness of the vast liberal conspiracy.