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Thursday, February 19, 2015

Elizabeth Warren: "The Game Is Rigged"

“The game is rigged.”  To the student of US History, the ring of this provocative statement should sound more than just vaguely familiar.  We should permit a digression before returning to this theme.

Does the statement sound more authoritative, echoing as it does from the US Senate floor of the nation’s capitol?  Its present day author is US Senator Elizabeth Warren (D-MA), progressive champion and Consumer Financial Protection Bureau architect.  If one did not know better, one would think she’s itching for a fight.  She wouldn’t be the first.

Sen. Warren, populist advocate, laments that consumers, families and the poor have been “chipped, squeezed and hammered."  At the 2012 Democratic National Convention she states that “Republicans say they don't believe in government. Sure they do. They believe in government to help themselves and their powerful friends.”  She continues: “After all, Mitt Romney’s the guy who said corporations are people.” Republican Mitt Romney would reinforce that rigged system, she said, while President Obama would continue his work to dismantle it.  Warren adds “No, Gov. Romney, corporations are not people.  People have hearts, they have kids, they get jobs, they get sick, they cry, they dance.  They live, they love, and they die.  And that matters.”

Sen. Warren’s new book is called A Fighting Chance (Metropolitan Books, 2014).  It spells out in detail how the game is rigged.  A typical passage follows:

“Here’s what I see out of this.  Washington works --- for those who can hire an army of lobbyists and lawyers.  It just doesn’t work so well for families.  I saw it with the big banks.  They cheated American families, crashed the economy, got bailed out, and now the five biggest financial institutions in America are 38% bigger than they were during the crash.  They still swagger through Washington blocking reforms and pushing around agencies.  They break the law.  And no banker even faces the inconvenience of a trial, much less a little jail time.  The game is rigged.”

In July 2014 Sen. Warren travels to Detroit, speaking out in support of her book’s ideas:

“Today, many powerful companies look for every possible way they can to boost their profits and to boost their CEO bonuses.  They try to run more efficient companies.  They try to grow faster.  They try to beat out the competition.  But many of them have another plan.  They use their money and their connections to try to capture Washington and rig the rules in their favor.  From tax policy to retirement security, those with power fight to make sure that every rule tilts in their favor.  Everyone else just gets left behind.  That’s what we’re up against.  That’s what democracy is up against.”

And for the grand finale: “A kid gets caught with a few ounces of pot and goes to jail.  But a big bank launders drug money and no one gets arrested.  The game is rigged.  And it isn’t right.  It’s rigged.”

There’s an awful lot of substance weaved in here.  A former Harvard professor, Sen. Warren is by all accounts an extremely intelligent woman.  The War on Drugs swallows up the ideal if not the cause of the War on Poverty --- and just beneath the surface there lies the continued control and subjugation of the black race and people of color more generally.  And today, poverty is not restricted to people of color --- many whites share the tattered cloak.

The catchphrase ‘The game is rigged’ is, of course, bespoken of frustration.  But here’s the interesting part.  Sen. Warren knows that the game has been planned this way all along.  The frustration dates back more than 200 years.  It is Thomas Jefferson’s frustration, as well.

The new constitution for the young country with the fledgling democracy does not endorse a particular economic system.  Secretary of Treasury Alexander Hamilton proposes the economic system of capitalism on the successful British model. Secretary of State Thomas Jefferson objects.  As with most issues he faces down, President Washington is unable to fall back on precedent. 

Jefferson says that Hamilton’s system flows “from principles adverse to liberty, and was calculated to undermine and demolish the republic.”  It does this by creating an artificial class of wealth with certain inherent privileges to certain of its benefactors, which were not the privileges of all citizens.  These benefactors, not by coincidence, are the system’s creators and protectors --- they are members of the US Congress.  Hamilton’s plan, a class system favoring money, would violate the unfettered freedom of the individual to pursue happiness.  It sounds as if Jefferson’s saying that the game is rigged.

Taking Jefferson's arguments into account, before ultimately rejecting them, President Washington’s fateful decision in favor of Hamilton’s plan envisions the greatest good for the greatest number.  Its success by almost any reasonable measure is beyond question.  And so, when Sen. Warren says ‘the game is rigged’ and this is what democracy is up against, isn’t she asking ordinary citizens to question the wisdom of George Washington?

On any legitimate scorecard, it’s a mighty tall order. 

-Michael D’Angelo

Thursday, January 15, 2015

Hamilton's Liberty and the Pursuit of Happiness

“And so this is freedom.”  Peering up at the tall buildings dotting the skyline around New York City’s enchanting Madison Square Park, it posed as much a question as a statement.  No doubt the atmosphere was exhilarating in the confines of this midtown Manhattan landmark, just up the road from Wall Street.

“Yep!” came the succinct reply.  Of note was not so much what the answer stated but how it was stated.  The smile was broad and confident.  The chest and shoulders were thrust outward with great pride, like a peacock in full bloom.  This was a recent college graduate who got a job on Wall Street, working with money.  His father had made a career at one of the big multi-national banks, one that had grown too big to fail.

“Was it your dream to work on Wall Street?  Is this what you always wanted to do?”  The questions were familiar.

“Yeah, but I intend to work here only a few years.  Then, I’ll have the money to do what I want --- get married, have kids, raise a family, buy things, travel … .”  In talking about his dreams, in essence the American Dream, the conversation remained lively, continued for some time.  The questioner permitted this indulgence, as the door had been opened.

The questions continued: “Where did you go to college?”

Union College, in upstate New York.”

Founded in 1795, Union College is one of those quaint, smallish liberal arts colleges which dot the Northeast landscape, with an old Yankee reputation for where the affluent send their children.  Many of the kids who live in the Northeast corridor, and in certain pockets on the West coast, conduct their affairs as if attending a school which costs north of $60,000 per year for four years is not a privilege but an entitlement.

It was time for an off speed pitch: “Hey, do you know that Franklin Roosevelt’s father went to that school?”

He replied: “No --- that would be news to me.  I thought I was aware of all the famous people who went to our school.”

Curiosity turned to what else this recent grad might be unaware of.  He was free, that much was true.  But did he contemplate the reality of his freedom, within this concept we call liberty?  Did he know that the pursuit of happiness had in fact pre-dated the phenomenon of Wall Street where he worked?  Did he realize that Wall Street was, and remains, man’s artificial creation?

What if there were no Wall Street?  What would he be doing then?  He had gone to Wall Street because he was incentivized to go.  Did he envision himself as a pawn, or rather --- like a sheep --- chasing money?  Hamilton had set it up this way, of course.  An astute student of the most useful “science of human nature,” Alexander Hamilton had incentivized greed, that vice so prevalent on the dark side of human nature.  The result conceived the physical greatness of the state, as in material possessions, some say at the expense of a benign creator.  The rest (including the pursuit of happiness) would fall neatly into place behind it, so the theory went.  No wonder Jefferson had objected so strenuously.

Individuals should enjoy as much opportunity and freedom from interference as is necessary to the efficient performance of their work.  The making of fortunes has been of the utmost benefit to the whole economic engine, contributing greatly to economic efficiency and productivity.  They have been overpaid, but it has been earned.  Individuals must continue to be encouraged to earn distinction by abundant opportunity and with cordial appreciation.

But individualism is threatened when forced into a common mold, as when the ultimate measure of value is the same, and is nothing but its results in cash. This subtle point does not diminish its importance.  The pressing need is to discredit a democracy of indiscriminate individualism and promote one of selected individuals obliged constantly to justify their selection, as, for example, by adhering to a broader standard, which includes the disinterested, ethical obligation that distinguishes the unselfish citizen from the mere hoarder of gold.  In truth, individuality cannot be dissociated from the pursuit of a disinterested object.

To the extent that the rule has tended to create a powerful yet limited class whose object is to hold and increase the power it has gained, should it be perpetuated?  Should individuals be permitted to outlast their own utility?  Or must individual distinction continue to be earned?  Hostility is not dependent upon the existence of advantageous discriminations for a time, but upon their persistence for too long a time.  Put another way, can economic power at least be detached in some measure from its individual creator?

Take the inheritor of a fortune, who has an opportunity thrust upon him, an economic privilege which he has not earned and for which he may be wholly incompetent.  Individual ability is rarely inherited with the money.  But by virtue of that power he is primed to exploit his fellow citizens, whose own opportunities are thereby diminished.  His position bestows upon him a further opportunity to increase his fortune without making any individual contribution to the social character of the nation.

The money which was a source of distinction to its maker becomes a source of individual demoralization to its inheritor.  His life is organized for the purpose of spending a larger income than any private individual can really need.  In time it can hardly fail to corrupt him.  As a consequence, the social bond upon which the political bond depends is loosened.  The result is class envy on one side, and class arrogance or contempt on the other, unity coming at a cost of a mixture of patronage and servility.

If Union College had taught this, could the lesson be revived?

-Michael D’Angelo