STAFF NEWS & ANALYSIS
Geithner Dislikes Wall Street
By Staff News & Analysis - April 28, 2010

Treasury's Geithner (left) resents "Wall Streeter" tag … Treasury Secretary Timothy Geithner doesn't like the fact that he's so often associated with being a creature of Wall Street when nearly his whole career has been in public service. In an interview on CNN's "GPS" program on Sunday, Geithner responded sharply when asked how he felt about being portrayed as "somehow in bed with Wall Street firms" while he spearheads the Obama administration's financial reform efforts. At first it was amusing, but not for long. "It is part of a narrative that hardened, which is that people came to view the judgments we were making through the prism of a myth," Geithner said, adding it was untrue that he had a background that left him beholden to industry. "So I think it's actually very damaging," he said. "It's completely false, of course, and it, you know, should have been corrected a long time ago." – Reuters

Dominant Social Theme: Public servant, not corporate wretch.

Free-Market Analysis: US Treasury Secretary Timothy Geithner doesn't want to be seen as being affiliated with Wall Street, and we can't blame him. But what's odd from our perspective is that he does want to be known for being associated with "public service." We think this is very revealing and shows the Obama administration's tin ear when it comes to some of the larger issues its struggling with and how the American public perceives those issues and the administration generally.

Let's try to put this in perspective. Geithner doesn't want to be linked to an industry that many Americans actively despise and that according to about 60 percent of Americans needs more regulation. Yet a whopping 80 percent of all Americans actively distrust the government, according to a recent Pew survey, that Geithner wants to be known as serving. What Geithner is doing here, obviously, is drawing a distinction between the money grubbing of Wall Street and the selflessness of American public service.

Of course it's NOT true. The US federal government is the flip side of Wall Street, the enabler of some of Wall Street's worst excesses and generally a co-conspirator in anything that goes wrong on Wall Street and probably on Main Street as well. A US$3 trillion behemoth, the US federal government actively sets the rules of the playing field that Wall Street performs on. US fiscal and monetary policies create barriers for Wall Street but opportunities as well.

Geithner's quaint use of the term "public service" – which is much in vogue in Washington these days – harkens back to the beginnings of the American republic when citizen farmers gave up their livelihood often at great cost to serve for a few years in Philadelphia or the swamp of Washington DC before returning to their diminished savings and rundown agricultural estates. Geithner on the other hand, by his own reckoning, has never held a private sector job but has always worked in some "policy" function or other, according to interviews he's given on the subject. He's proud to say he began tilling the vineyards of public polity just out of college and never looked up since.

But in fact Geithner is just plain wrong to point to what he's doing as a public service. Certainly, the servant part, at least, is a woeful mischaracterization of the modern bureaucrat's role within the larger federal entity. Whether it's China, Japan, the EU or America, politicians and bureaucrats have inordinate power and salaries and perks that represent the spoils of power status. They are public servants only in the sense that they perform their roles in public and for public entities.

And who exactly is the politician a public servant to? More than ever before, the modern politician serves not the electorate but the ruling power elite of the day and reinforces its dominant social themes. The goal is indeed the centralization of power and wealth and the elite's fear-based promotions are a tool employed to this end. In America and Europe especially, politicians make their living by accommodating these themes and passing legislation that buttresses their effectiveness.

There is really no other way to explain the behavior of modern public servants. These individuals claim with a straight face that central banking – the creation of money out of thin air – is a basic building block of a healthy economy. Having concentrated the power of financial entities a thousand-fold through regulations that raise the barriers of entry, they continue to add to the complexity of regulation (especially financial regulation) in such a way that fewer and fewer firms are able to entirely comply, let alone function properly. The net result concentrates industrial power in fewer and fewer hands, which could be said to be a main focus of a power elite that would like to deal with a few, large entities when pursuing its global goal of greater, one-world consolidation.

From increased taxes, to expanded power for regulatory agencies, to broader mandates for central banks, today's public servants work for the powers-that-be rather than any democratic constituency. The cronyism and back-scratching that goes on is troubling to behold. And the rewards for successful service are gratifying indeed – at least from the public servant's perspective.

Top pols like Bill Clinton and Tony Blair can virtually mint money once they have served their time in office. As elder statesmen, they command the entire network of power elite influence. If they wish to write a book, publishing companies will provide million-dollar advances. If they wish to go on a speaking tour, there are a plethora of alphabet-soup think tanks with power elite ties that will gladly pay them hundreds of thousands of dollars for a couple of hours' worth of conversation.

Yet people are increasingly aware of the relationship between the pandering a politician does in office and the payoff that it provided and accepted after the fact. The Internet makes the linkages uncomfortably clear. We referred to the Obama administration's "tin ear" about what public service has become for just this reason. Many government employees in the West are making more than their private market counterparts, while top pols rake in millions after office. Yet the larger economy suffers through a virtual depression and voters' resentment grows.

After Thoughts

To insist, within this context, as Geithner does, that he is a public servant simply doesn't ring true for many – at least in our opinion – especially given Geithner's widely publicized tax problems. Does the US administration really believe it can garner support for its policies by maintaining that they are the dispassionate results of public service? We would suggest this is a misjudgment.

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