Socialist Senator Sanders saves capitalism

[cali]

Editor’s note: This op-ed is by Tom Evslin, an author, entrepreneur and former Douglas administration official. Evslin first posted this piece on his blog, Fractals of Change.

Senator Bernie Sanders (I-VT), who describes himself as a socialist, was the force behind legislative language which forced the Fed to divulge details of the many aid and subsidy programs it ran in response to the recent recession. It’s not a pretty picture; it does need the light of day. “It appears that we are very much a country in which we practice socialism for the rich and rugged capitalism for everyone else,” Sanders said.

Sad thing is that he’s right. Capitalism (I’m a self-described capitalist) only works when failure is an option for the rich as well as the poor, the powerful as well as the powerless. The state is more intrusive when it bails out a bank than it is when it provides unemployment insurance or even welfare. When institutions get so powerful that they can threaten to bring down the economy if they don’t get what they want (aka too big to fail), it’s time for a round of trust-busting like the one industrialist and Republican Mark Hanna was correct to fear when “that damn cowboy” Republican Teddy Roosevelt became president.

If it takes a socialist to wake us up to government and capitalism gone awry hand-in-pocket, so be it. The problem needs to be corrected, not ignored.

It is the role of the Federal Reserve to smooth the functioning of the banking system; it is even the Fed’s role to keep the money moving in shocks like 9/11, which they did well. You would expect the Fed to be more active in a banking crisis than in normal times (although you might have also expected the Fed to see some of the problems which led to the crisis).

What you would not expect is to find that the chairman of the NY Fed at the time, Stephen Friedman, was a director of Goldman, which hit the Fed up for help 52 times and had a high balance of $18 billion after quickly turning itself into a bank to qualify for aid. It does not help that he was given a waiver by the Fed to continue as chair AND that, according to the NYTImes, he bought shares in Goldman while that bank was being bailed out by the Fed. BTW, two of the other nine members of the board of the NY Fed were the chief executives of GE and JPMorgan, both of which also received Fed support.

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http://vtdigger.org/2010/12/14/evslin-socialist-senator-sanders-saves-capitalism/