Running Backwards

[col. writ. 2/26/09] (c) '09 Mumia Abu-Jamal


Few sciences are more complex than economics, for despite the plethora of formulas claiming to define its workings, economics remains a bedeviling mystery that confuses and confounds the best minds time and time again.

That's often because our economic ideas are formed not only by our experiences but by our beliefs, and as such, we defend our ideas based not on evidence, but on our theoretical constructs -- again, what we believe.

We are free marketeers, or Keynesians; we follow the theories of Adam Smith, Henry George, David Ricardo or Karl Marx the way we follow our favorite basketball team, win or lose.

Sometimes those theories blind us to the bigger game of life outside our doors.

Much of the current economic crisis is the direct result of the economic theory of deregulation, made, not under George Bush alone, but in the waning days of the Clinton administration. For it was in 1999 that Clinton's treasury secretaries, first Robert Rubin, and later Larry Summers, advocated the repeal of the Glass-Steagall Act, a 1933 law which prohibited commercial banks and investment banks from functioning in the same house.

The reason? None other than ole FDR. President Franklin D. Roosevelt explained as much in his famous "Fear Itself" inaugural speech of 1933, when the nation was reeling in the grips of the Great Depression. Roosevelt said,"...there must be a strict supervision of all banking and credits and investments; there must be an end to speculation with other people's money..."*

In November 1999 President Bill Clinton signed into law the Gramm-Leach-Bliley Act, essentially repealing Glass-Steagall, by tearing down the brick wall between commercial and investment banks. The securities industries went on a tear, making millions, billions and then tens of billions on speculation with other people's money-- until the house of cards came crumbling down in November 2008.

The speculation business didn't just become toxic. It was poison in the 1930's, and came back to life in the late '90's more poisonous than ever.

By then, both political parties were parties of deregulation, for both were instruments of corporate power, and both were the authors of today's Great Recession, if not the Depression to come.

--(c) '09 maj

[*Source: Franklin D. Roosevelt's 1st Inaugural Address, 1933 ("The Only Thing to Fear Is Fear Itself" speech), repr. in Labour & Trade Union Review (No. 194: Feb. '04), p.6]