I’m re-reading Matt Taibbi’s, Hate Inc., and enjoying it even more than the first time. Written as an update to the classic–Manufacturing Consent–it’s a great primer on media malfeasance and how we came to have a con-man as our president. The chapter where he deconstructs Trump’s campaign through the lens of pro-wrestling is priceless.
I do have one minor quibble.
Taibbi is basically writing a mea culpa for his part in feeding the corporate media beast raw meat and he makes plenty of great points about how the news is simply another product they sell us. And he has some great advice about not getting to caught up in the voluminous product in that we can’t do anything about it. But the part about financial products caught my eye. He says we can’t hope to understand any of these financial products like credit default swaps or derivatives because they are too opaque.
My quibble is that Taibbi is relegating this opacity to economics. Instead, it’s clear that the reason these financial products are opaque is political. It’s predicated on the immense power of the financial and banking industry with their legions of lobbyists and riches of campaign donations.
As we’ve witnessed, over the last several decades Wall Street has carried out an epic crime spree due to opacity. As heterodox economist Michael Hudson, repeats endlessly–opacity is the necessary first step to looting.
This state of affairs hasn’t always been thus. From the banking reforms of the New Deal until a bi-partisan push to deregulate finance in the 1990’s, banking was highly regulated and as a result was staid, boring and modestly profitable, while the productive economy boomed.
Now the fiendishly complex field of finance has become a lot more exciting, and immensely more lucrative for Wall Street, while the productive economy has stagnated.
This state of affairs is the ultimate political question– how do we maintain a productive economy rather than an extractive one?
Right now it’s not looking good for the home team. In the face of a new a terrifying pandemic our corporate governance responded with the largest upward transfer of wealth in history, leaving banks and corporations with record-high stocks while killing small businesses and abandoning the public after handing some of them a paltry $1200, all while failing spectacularly to address the threat of the virus itself.
This financial abuse is happening right out in the open, right in front of everyone.
I don’t profess to understand credit default currency swaps anymore than Taibbi but I do know the consequences of an opaque financial system.