What happened to the global economy and what we can do about it
with 23 comments
By Simon Johnson
Congressional Republicans are apparently intent on a big showdown with Elizabeth Warren, who is currently building up the new Consumer Financial Protection Bureau (CFPB).
This is very good news for the White House, if they use this opportunity wisely.
Some Republicans seem to think that Ms. Warren is about "big government" or "intrusive regulation". But this is not the case "“ Elizabeth Warren's approach is much more appealing and already popular with almost everyone on right and left: Transparency.
Look carefully at Ms. Warren's September speech to the Financial Services Roundtable and think about how this plays as a broader political message.
Her political principle is clear and completely compelling:
"""¦the best way, in my view, to strengthen those middle class families is to find solutions that are deep and lasting, that strengthen the markets, and that will create a robust, competitive consumer credit industry that works for families, not against them."
Her economic approach is also right on target "“ the market should work for the consumer:
"I come to Washington as a genuine believer in markets and a genuine believer that the purpose of regulating the consumer credit market is to make that market work for buyers and sellers alike: a level playing field where the best products at the best prices win. When it works, the market is an ally to consumers. And, when it works, the market rewards those lenders who offer the best value to their customers."
"¦
"When I talk about functioning markets, I'm not using the word "market" as coded language for a return to the Wild West where companies use deception to pick off every consumer they can get in their sites. A free market is one where consumers have the ability to make well" informed choices, where the choices are visible and the terms are clear, and where there are cops on the beat to make sure that everyone plays by the same rules."
In other words: stop already with the cheating of people. This is not good for our economy, not good for business as a whole, and definitely not good for American families.
"But credit agreements have gotten long and complicated. In fact, there's a new epithet: fine print. I understand that some of you call it "mice type."Where I come from, nobody calls fine print, hidden fees and surprise penalties "negotiated contract terms" or "innovations." On a polite day, my brothers in Oklahoma call that kind of stuff "garbage.""
This is the specific deliverable: Get rid of the fine print.
"An AARP poll earlier this year showed that 96 percent of Americans over 50 surveyed want to put an end to the fine print in their credit agreements. Just in case you missed the point, 91 percent felt strongly about that. 96 percent? These are your customers."
And they vote. This is exactly the terrain onto which the White House should seek to shift the political debate.
Don't play the Republicans' game by agreeing to debate "big" vs. "small" government. This is a complete illusion "“ just watch the favors that businesses will seek from Republicans on the Hill; not all of these appear “on the government’s balance sheet”, to be sure, but you can talk to the anguished people of Ireland about how exactly supposedly ”pro-business” (and definitely pro-big bank) policies end up costing the taxpayer a lot of money. (Or just look at how the financial disaster of 2008-09 ended up costing us 40 percentage points of GDP, measured in terms of the increase in our national debt – directly because of how the financial sector ran its customers and itself into the ground.)
The political debate should begin with documenting business practices that are misleading and duplicitous, wherever they occur.
We need transparency and accountability in the financial sector "“ and in all other parts of our economy. Elizabeth Warren is exactly the right person to lead this charge, in the first instance from the CFPB.
She should be nominated by President Obama to head the agency. The fight for her confirmation would make her ideas clear to millions. Let's see which senators exactly are willing to argue against greater transparency. Share this: Email Facebook Print Share Digg Reddit StumbleUpon
Written by Simon Johnson
November 29, 2010 at 6:46 am
Posted in Commentary
Tagged with Elizabeth Warren
When people assert that they are pro-business we really don't know what they mean. It all depends upon what they believe the purpose of business is. Is it to maximize profit for its owners? Is it to provide its executives with as much material gain as possible? Is it to provide people with quality goods and services?
If we look to what's practiced as a means of determining which of the above applies we find examples that fit each. That said we also find that the most prevalent is maximizing material gain for executives, particularly in publically traded corporations. This is evidenced by the tremendous growth in the gap between what the average worker earns and what the top executives of organizations are paid"”it's multiples of a hundred times more"”irrespective of the organization's market performance. Demand for the organization's products and services could fall but the compensation of its' executives climb.
It is not that they are for business as much as they are for what allows them to gain as much as they can in the short term. Likely, if something other than business afforded them the same material gain then they'd be for that instead. Business is just the instrument it is not the focus of their favor, personal gain is.
So supporting the common pro-business cry may not really be support for the wellbeing of society and its businesses at all. Rather it is enabling those in authority of businesses to extract whatever they can from whomever they can and as quickly as they can in order to increase their personal gain, even though business is not a private affair.
However, if the purpose of business is to provide quality to society in general, and to people in particular, then being pro-business means advocating for enabling the flow of the human spirit and the emergence of potential through the conduct of business with a different aim. This requires taking the long view as well as thinking in terms of (living) systems. In this way it is not business versus society but business for society. It means pursuing progress for the benefit of everyone and in more ways than just materially.
Aren't we all here for the long term? Shouldn't we (all) be proponents of this different way of business?
progressus
November 29, 2010 at 9:53 am
“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public”
Were in desperate need of a distinction here between “pro-business” and “pro-markets.” Businesses hate competing in free markets, and everything they say, especially the largest businesses, should be read through this prism. Being pro-business will often mean being anti-markets (arguabley “socialist”). For example, through failing to ensure a competitive market in finance and dealing with the TBTF problem, a Congressmen may expect to garner praise from big finance for being “pro-business.” S/he is certainly not, however, pro-markets.
George999x
November 29, 2010 at 11:06 am
http://search.aol.com/aol/search?s_it=topsearchbox.search&v_t=webmail-hawaii1-standardaol&q=Phil+Angelides
We need to distinguish between capture, con artistry and outright corruption posing as business. Phil Angelides has been a voice in the dead end streets of reality. It is a total misdirection to talk in terms of normal markets/ …this is about power and control!
Bruce E. Woych
November 30, 2010 at 2:26 pm
The working class (and Reagan Democrats) defend the R’s and the wealthy because they hope to see themselves in their income tax bracket some day… in the meantime, the lamestream media continues the brainwashing technique to control everyone on behalf of the 1 percent club. Elizabeth Warren can only do so much; Geithner (please help, http://adjix.com/5yq8) and Obama have her on a short leash so she can only bark at the TBTF banks from the sidelines.
While You Were Sleeping, they are trying to undo some dysfunctional politics: (http://tinyurl.com/24qhsmx ). However, if you missed the last three years for some unfathomable reason, here is the entire Financial Crisis explained in less than ten minutes: http://tinyurl.com/377zywv. Also, explained is the One Percent Club and what that means for President Obama and his Administration in the next Congress: http://tinyurl.com/3yk2uwb .
Finally, the best holiday rant so far:
'Twas the Night Before Doomsday
Twas the night before doomsday When all through the marts Not a damn thing was stirring Not even the shopping carts
Mortgages had been bundled by Theft merchants without care In hopes that someone else Would get caught holding scared
There were almost three decades Of merchants playing in muck Keeping health care from children And gasoline in the truck
w kept stem cells All safe in their sacks While soldiers were slain In WMD free Iraq
Taxes were held low For those in the fast lane While wages for real workers Continued to wane
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