One bubble burst, then another and another. Enron, Global Crossing,
WorldCom. The rectitude of auditors--pop. Faith in corporate CEOs and
stock market analysts--pop, pop. The self-righteous prestige of
Citigroup and J.P. Morgan Chase--pop and pop again. The largest bubble
is the stock market's, and it may not yet be fully deflated. These
dizzying events are not an occasion for champagne music because the
bursting bubbles have cast millions of Americans into deep personal
losses, destroyed trillions of dollars in capital, especially retirement
savings, and littered the economic landscape with corporate wreckage.
Ex-drinker George W. Bush explained that a "binge" is always followed by
the inevitable "hangover." What he did not say is that the "binge" that
has just ended with so much pain for the country was the conservative
Economic liberalism prevailed from the New Deal forward but broke down
in the late 1960s when it was unable to resolve doctrinal failures
including an inability to confront persistent inflation. Now market
orthodoxy is coming apart as a result of its own distinctive failures.
It can neither explain the economic disorders before us nor remedy them
because, in fact, its doctrine of reckless laissez-faire produced them.
The bursting bubbles are not accidents or the work of a few
larceny-prone executives. They are the consequence of everything the
conservative ascendancy sought to achieve--the savagery and injustice of
unregulated markets, the blind willfulness of unaccountable
We will be a long time getting over the conservative "hangover." It may
even take some years before politicians and policy thinkers grasp that
the old order is fallen. But this season marks a dramatic starting point
for thinking anew. Left-liberal progressives have been pinned down in
rearguard defensive actions for nearly thirty years, but now they have
to learn how to play offense again. Though still marginalized and
ignored, progressives will determine how fast the governing ethos can be
changed, because the pace will be set largely by the strength of their
ideas, their strategic shrewdness and, above all, the depth of their
convictions. That may sound fanciful to perennial pessimists, but if you
look back at the rise of the conservative orthodoxy, it was not driven
by mainstream conservatives or the Republican Party but by those
dedicated right-wingers who knew what they believed and believed, most
improbably, that their ideas would prevail.
The new agenda falls roughly into three parts, and the first might be
described as "restoring the New Deal." That is, the first round of
necessary reforms, like the Sarbanes bill already enacted, must
basically restore principles and economic assurances that Americans used
to enjoy--the protections inherited from the liberal era that were
destroyed or severely damaged by right-wing deregulation and corporate
corruption of government. Pension funds, for instance, lost horrendously
in the stock market collapse and face a potentially explosive crisis
because corporate managers gamed the pension savings to inflate company
profits. Employees of all kinds deserve a supervisory voice in managing
this wealth, but Congress should also ask why corporations are allowed
such privileged control over other people's money. Broader reform will
confront the disgraceful fact that only half the work force has any
pension at all beyond Social Security and set out to create tax
incentives and penalties to change this.
Another major reconstruction is needed in antitrust law, to restore and
modernize the legal doctrine systematically gutted by the Reagan era
(and only marginally repaired under Clinton). The financial debacle
includes scores of companies concocted by endless mergers that pumped up
the stock price but added no real economic value. Others sought to build
the dominance of oligopoly and have succeeded across many sectors.
Spectacular failures include AOL Time Warner and the airline industry.
Skepticism of unlimited bigness needs to be renewed and should start
with the banking industry--reining in those conflicted conglomerates,
like Citigroup and J.P. Morgan Chase, created with repeal of the New
Deal's wise separation of commercial and investment banking.
New Dealers got a lot of things right, but the second dimension of new
progressive thinking requires a recognition that returning to the New
Deal framework is essentially a retrograde option (and not only because
the country is a different place now). Liberals ought to ask why so many
New Deal reforms proved to be quite perishable or why some of its
greatest triumphs, like the law establishing the rights of working
people to organize, have been perverted into obstacles for the very
people supposedly protected. In short, this new era requires
self-scrutiny and the willingness to ask big, radical, seemingly
impossible questions about how to confront enduring social discontents
and economic injustice.
Who really owns the corporation (clearly it's not the shareholders), and
how might corporations be reorganized to reduce the social injuries? Is
the government itself implicated in fostering, through subsidy and
tax-code favoritism, the very corporate antisocial behavior its
regulations are supposed to prevent? Congress, aroused by scandal, is
considering penalizing those companies that moved to Caribbean tax
havens yet still enjoy US privileges and protection. That's a good
starting point for rethinking the nature of government's corporatized
indulgences (old habits first formed in the New Deal) and perhaps
turning them into leverage for public objectives. To explore this new
terrain, we need lots of earnest inquiry, noisy debate and re-education
by a reinvigorated labor movement, environmental and social reformers
and ordinary citizens who yearn for serious politics, significant
A third dimension for new thinking is the economic order itself. During
the past two decades, a profound inversion has occurred in the governing
values of US economic life and, in turn, captured politics and elite
discourse--the triumph of finance over the real economy. In the natural
order of capitalism, the financial system is supposed to serve the
economy of production--goods and services, jobs and incomes--but the
narrow values of Wall Street have become the master. The Federal Reserve
and other governing institutions are implicated, but so are the media
and other institutions of society.
The political system is, of course, not ready to consider any of these
or other big matters. One of the first chores is to bang on the
Democratic Party, which, despite some advances, has expressed its fealty
to corporate money by clearing the fast-track trade bill and bankers'
bankruptcy bill for passage. This amounts to selling out principle and
loyal constituencies before the election, instead of afterward. Of
course the politicians are hostile--what else is new?--but now it's the
left that can say, They just don't get it.
Reversing the nation's deformed priorities will be a hard struggle but
has renewed promise now that the stock market bubble and other New
Economy delusions have been demolished. People do not live and work in
order to buy stocks. People exist in complex webs of relationships with
family, work, community and many other rewarding adventures and
obligations. The larger purpose of the economic order, including Wall
Street, is to support the material conditions for human existence, not
to undermine and destabilize them. If that observation sounds quaint,
it's what most Americans, regardless of ideology, happen to believe. If
our progressive objectives are deeply aligned with what people truly
seek and need in their lives, the ideas will prevail.
"Creative accounting" is something we hate.
From now on your numbers will have to be straight.
No taking of options for stock you contrive
To dump when insiders can tell it will dive.
And loans? If you want one, then go to the bank.
These sweetheart loans stink! They're disgusting! They're rank!
This type of behavior we strictly forbid.
Just do as we say now, and not as we did.
"Tell me about the hash bars."
"OK, what do you want to know?"
"It's legal there, right?"
"It's legal, but it ain't 100 percent legal."
Thou hast taken usury and increase, and thou hast greedily gained of thy neighbor by extortion, and hast forgotten me, saith the Lord God.
Research support provided by the Investigative Fund of the Nation Institute.
In June, the New England Journal of Medicine, one of the most respected medical journals, made a startling announcement.
The Nation reported on Dr. Pendergraft's troubles in
"Abortion on Trial" by Hillary Frey and Miranda Kennedy, June 18, 2001.
These days, it's the media conglomerates who are drunk with power--demanding a larger share of the nation's airwaves and threatening to turn the World Wide Web into an electronic theme park--and
Speaking on NPR recently, Cokie Roberts, the soon-to-retire co-host of
ABC's This Week, falsely informed her listeners that "the
President was exonerated by the Securities and Exchange Commission." In
fact, even though his daddy was the President of the United States
during the incident in question, after a remarkably relaxed
investigation the SEC informed Bush's lawyer that its decision "must in
no way be construed as indicating that [George W. Bush] has been
Call me sentimental, but I'm going to miss the old gal. With no
discernible politics save an attachment to her class, no reporting and
frequently no clue, she was the perfect source for a progressive media
critic: a perpetual font of Beltway conventional wisdom uncomplicated by
any collision with messy reality.
Lippmann/Dewey fans will remember that the very idea of a watchdog press
breaks down when the watchdog starts acting like--and more important,
sympathizing with--the folks upon whom he or she has been hired to keep
an eye. With Cokie, this was never much of an issue. Her dad was a
Congressman. Her mom was a Congresswoman. Her brother is one of the
slickest and wealthiest lobbyists in the city. Her husband, Steve
Roberts, holds the dubious honor of being perhaps the only person to
give up a plum New York Times job because it interfered with his
television career. And together they form a tag-team buck-raking/book-writing enterprise offering up corporate speeches and dime-store
"Dear Abby"-style marriage advice to those unfortunates who do not enjoy
his-and-her television contracts.
Cokie came to public attention at NPR, where she developed some street
cred as a Capitol Hill gumshoe, but apparently grew tired of the hassle
of actual reporting, which only helped her career. With no concern for
the niceties of conflicts of interest, she and her husband accepted
together as much as $45,000 in speaking fees from the very corporations
that were affected by the legislation she was allegedly covering in
Congress. Moreover, she claimed something akin to a royal prerogative in
refusing to address the ethical quandary it obviously raised. (A
spokesman responding to a journalist's inquiry said that Queen Cokie's
corporate speaking fees were "not something that in any way, shape or
form should be discussed in public.")
Apparently, nobody ever told Cokie that the job of the insider pundit is
to at least pretend to be conversant with the major political, economic
and intellectual issues in question before putting these in the service
of a consensually derived story line. The pedantic George Will and the
peripatetic Sam Donaldson at least give the impression of having
considered their remarks ahead of time, either by memorizing from
Bartlett's or pestering politicians. Not Cokie. Once, when a
reporting gig interfered with one of her many social and/or speaking
engagements, she donned a trench coat in front of a photo of the Capitol
in the ABC studios in the hopes of fooling her viewers. She was not a
real journalist; she just played one on TV.
Still, her commentary was invaluable, if inadvertently so. As a pundit,
she was a windup Conventional Wisdom doll. The problem with Bill
Clinton, for instance, was that he was the wrong sort for Cokie and her
kind. "This is a community in all kinds of ways," she told Sally Quinn
during the impeachment crisis. "When something happens everybody gathers
around.... It's a community of good people involved in a worthwhile
pursuit." Here was her analysis of the complicated constitutional
questions impeachment raised: "People who act immorally and lie get
punished," she proclaimed, noting that she "approach[ed] this as a
mother." (Her own children are fully grown, but perhaps they're real
sensitive...) "This ought to be something that outrages us, makes us
ashamed of him." When the country refused to go along with the ironclad
Broder/Cokester consensus, she supported impeachment anyway, because
"then people can lead public opinion rather than just follow it through
the process." These same "people," meaning Ken Starr, Newt Gingrich and
Cokie's friends, made a return appearance in Cokieworld when the Supreme
Court handed Al Gore's victory to George W. Bush following the Florida
2000 election crisis. "People do think it's political, but they think
that's OK," she averred. "They expect the court to be political, and
they wanted the election to be over."
All this is relevant to those of you who are not dewy-eyed about Cokie's
departure--or Dewey-eyed about democracy, for that matter--because
Cokie's inadvertent honesty helps us understand how George W. Bush ever
made it to the White House in the first place. Why are we hearing about
Harken Oil only today? Why did the press ignore the evidence of Bush's
personal and professional dishonesty back in 2000, when it still
mattered? Meanwhile, these same reporters concocted stupid stories about
Al Gore's penchant for "exaggeration," misreporting the simplest facts
on his (essentially accurate) claims about the Internet, Love Canal and
Love Story. It's not as if evidence of Bush's unsavory past was
unavailable. I wrote about it twice on MSNBC.com, in the fall of 2000,
following a damning Talk magazine exposé of Bush's
suspicious business ethics, written by Bill Minutaglio and Nancy Beiles,
and based on documents made public by the Center for Public Integrity.
But nobody cared. The Times, the Post, the Journal,
CBS, ABC et al.--who had all championed Ken Starr's $70 million
investigation of a $30,000 unprofitable land deal--did not think Bush's
fortune-making sweetheart deals were worth more than the most cursory of
investigations. (Let's not even bring up the dubious Texas Rangers deal
or the missing years in his National Guard record.)
How did the media--and hence the nation--manage to miss these stories?
Just ask Cokie: As she explained back then in defense of herself
and her colleagues, "The story line is Bush isn't smart enough and Gore
isn't straight enough. In Bush's case, you know he's just misstating as
opposed to it playing into a story line about him being a serial
exaggerator." Thus spake Cokathustra.
For more, check out www.altercation.msnbc.com during The Nation's
summer lull. We never take vacations at Altercation.
Events in Washington are potentially momentous, but hold the applause.
In late May, the Dow was at 10,300, but by mid-July it had dropped
almost 2,000 points. The Nasdaq and S&P indexes are at zero gain for
the past five years, as if the bubble never occurred. This slow-motion
crash induced even the most obedient right-wing lapdogs to scurry aboard
the Sarbanes reform bill, and the Senate passed it, 97-0. The President
made two malaprop-laced pep talks to recast himself as Mr. Reformer Guy
(and knocked another 500 points off the Dow). But W. is a lagging
political indicator these days. Even Federal Reserve Chairman Alan
Greenspan has lost his touch. For years he celebrated the new economy
and refused to take any action that might have worked to curb its
excesses; a bit late he tells us "irrational exuberance" was actually
"infectious greed." Now, with fear overtaking that greed in the markets
and thus in Washington, the ingredients are present for an ideological
sea change in American politics. But not yet.
Democrats, newly awakened to the potency of Enron-like financial
scandals, are throwing smart punches at the business-friendly White
House, but they are six months late to the cause (and still sound less
convinced than Republican maverick John McCain). The passage of Senator
Sarbanes's legislation is meaningful, but Democratic leaders choked on
the hard part--reforming stock options and giving workers a voice in
managing their own pension savings. Why mess up fundraising with those
high-tech companies dumping "New Dem" millions on the party of working
people? Majority leader Tom Daschle, who lamely promised a vote
(someday) on the stock-option issue, will be revealed as another limp
corporate shmoozer if he fails to deliver. So far, the Coca-Cola
directors have more courage than he. Likewise, Senator Joseph Lieberman
can doubtless raise millions from Silicon Valley for his presidential
ambitions by defending the corporate hogs but, if so, he should rethink
which party will have him.
The Republicans are in a deeper hole, of course. If Bush wants to bring
his much-touted "moral clarity" to the reform cause, he'll have to drop
the weepy speeches and dump Harvey Pitt as SEC chairman and Tom White,
the Enronized Army Secretary. Then Bush should take his own medicine and
come clean, open the secret SEC records of his insider cashout as a
director of Harken, and do the same for the SEC investigation of Vice
President Cheney's stewardship as CEO of Halliburton. Republican zealots
and their attack-dog newspaper, the Wall Street Journal,
exhausted the nation with their pursuit of the Clintons on Whitewater.
Stonewalling by the Bush White House promises to make these far more
serious financial matters a permanent theme of the Bush presidency.
The reforms currently in motion are a good start, but no more, as
William Greider notes on page 11. We know what to expect from the
Republicans--stubborn maneuvering and guile designed to stall real
change until (they hope) the stock market turns around and public anger
subsides. But Democrats have a historic opening far greater than this
fall's elections--the opportunity to revive their role as trustworthy
defenders of the folks who have always been the bone and sinew of the
party, the people who do not get stock options and who deserve a much
larger voice in Washington. If Democrats take a pass on the facts before
them, they deserve our scorn. If they find the courage to break out of
the corporate-money straitjacket and once again speak for the public,
this could be the beginning of something big.