This debate is going to be crystallised in the Goldman case. Much of America is going to reflexively insist that Goldman's only crime was being smarter and better at making money than IKB and ABN-Amro, and that the intrusive, meddling government (in the American narrative, always the bad guy!) should get off Goldman's Armani-clad back. Another side is going to argue that Goldman winning this case would be a rebuke to the whole idea of civilisation – which, after all, is really just a collective decision by all of us not to screw each other over even when we can. It's an important moment in the history of modern global capitalism: whether or not to move forward into a world of greed without limits. – UK Guardian/Matt Taibbi
Dominant Social Theme: Goldman bad. Very bad.
Free-Market Analysis: We always have to start these articles off with the requisite nod to the fierce Gods of Ancient (and Modern) Days. So let's get it out of the way. Here goes … Goldman is a horrible, smug, abusive institution with obvious ties to the power elite. It may indeed be the heart of darkness on Wall Street, the instrument through which the elite maneuvers as it plies its mercantalistic trade.
But the key word here is mercantilism. More than almost any other firm, Goldman sits at the intersection between government and private industry in America. That's how it makes its money. By using and abusing the laws of the land to line its own pockets. However, apparently, that is not a conversation that Americans can have anymore. Thomas Jefferson would have it – and often did have it both privately and in the presence of others.
American Founding Fathers generally understood (maybe with the exception of Alexander Hamilton) that the best government is the government that governs least. Matt Taibbi, who is a very talented journalist and writer, seems only to understand that government should act as a "boot stamping on the face of Goldman Sachs – forever." (Apologies to George Orwell.) This article appeared in the UK Guardian late April, but given all that is happening on Wall Street these days (and Taibbi's general relevance), an analysis seems fairly timely to us.
One of the problems from our point of view is that even if one grants that government can find the right face to stamp, there is no guarantee that ten years from now government will not be stamping on YOUR face. You may derive a great deal of satisfaction from using the regulatory levers of government to pry triumphant justice – dripping with gore – from the chest cavity of Goldman Sachs, but maybe (just maybe) you are fooling yourself or setting yourself, your family and your country up for an abusive situation. Here's some more from this brilliantly polemical piece:
Will Goldman Sachs prove greed is God? … The investment bank's cult of self-interest is on trial against the whole idea of civilisation – the collective decision by all of us not to screw each other over even if we can … So, the world's greatest and smuggest investment bank, has been sued for fraud by the American Securities and Exchange Commission. Legally, the case hangs on a technicality. Morally, however, the Goldman Sachs case may turn into a final referendum on the greed-is-good ethos that conquered America sometime in the 80s – and in the years since has aped other horrifying American trends such as boybands and reality shows in spreading across the western world like a venereal disease.
When Britain and other countries were engulfed in the flood of defaults and derivative losses that emerged from the collapse of the American housing bubble two years ago, few people understood that the crash had its roots in the lunatic greed-centered objectivist religion, fostered back in the 50s and 60s by ponderous emigre novelist Ayn Rand … Here in the States, her ideas are roundly worshipped even by people who've never read her books or even heard of her. The rightwing "Tea Party" movement is just one example of an entire demographic that has been inspired to mass protest by Rand without even knowing it.
Last summer I wrote a brutally negative article about Goldman Sachs for Rolling Stone magazine (I called the bank a "great vampire squid wrapped around the face of humanity") that unexpectedly sparked a heated national debate. On one side of the debate were people like me, who believed that Goldman is little better than a criminal enterprise that earns its billions by bilking the market, the government, and even its own clients in a bewildering variety of complex financial scams.
On the other side of the debate were the people who argued Goldman wasn't guilty of anything except being "too smart" and really, really good at making money. This side of the argument was based almost entirely on the Randian belief system, under which the leaders of Goldman Sachs appear not as the cheap swindlers they look like to me, but idealised heroes, the saviours of society.
In the Randian ethos, called objectivism, the only real morality is self-interest, and society is divided into groups who are efficiently self-interested (ie. the rich) and the "parasites" and "moochers" who wish to take their earnings through taxes, which are an unjust use of force in Randian politics. Rand believed government had virtually no natural role in society. She conceded that police were necessary, but was such a fervent believer in laissez-faire capitalism she refused to accept any need for economic regulation – which is a fancy way of saying we only need law enforcement for unsophisticated criminals. Rand's fingerprints are all over the recent Goldman story.
For us, Matt Taibbi (despite his polemics) ends up in such articles being an apologist for the system as it is. He apparently supports the SEC prosecution of Goldman Sachs for various civil crimes as part of what he perceives as elemental fairness. But does Taibbi know what the SEC really is? Has he studied it? Does he understand that Wall Streeters smirk that the SEC is part and parcel of a larger "regulatory capture" by the Street and that many of the SEC's ambitious staffers dream of going to work on Wall Street for fat paychecks. The insanely elaborate regulatory system in America NEVER does what it is supposed to. It is not only dysfunctional but actually organized so as to raise barriers of entry to the securities business. The ONLY thing that SEC prosecution of Goldman will really end up doing is raising more barriers, which will further empower Wall Street's largest banks.
And how can someone as bright as Taibbi not understand that Wall Street itself is a creature of central banking. Without central banks money flows and economic euphorias brought on by the over-printing of money, Wall Street would likely not exist as such an attractive money magnet. Add in regulation, beginning in the 1930s after the great depression, and you have monstrous mish-mash that empowers the powerful, concentrates capital in certain investment entities and generally works to strip Americans of their wealth and hopes once every business cycle (every 10-20 years). The regulatory structure of America, when combined with mercantilist central banking itself, is the prime facilitator of this horrid system.
Taibbi might have a point about Rand if it weren't for the central banking and regulatory structure that surrounds Wall Street and empowers it. Wall Street is actually as far from Rand's idea of independent, laissez-faire self interest as it could possibly be. Every part of Goldman's business is based to one degree or another on federal laws and regulations. We would bet at this point in the history of US "free-markets" that you could not find a SINGLE transaction in which Goldman participates in that does not have some sort of regulatory color.
Taibbi is just like Simon Johnson in our book (see other article, this issue of the Bell) – blasting Wall Street and Goldman in particular without any regard to the larger frame of reference in which Goldman functions. Such analysis at this point in time is beyond naïve in our opinion. It verges on the manipulative. Does Taibbi really believe that the US government retains some sort of collective moral purity that is absent on Wall Street? No, Washington DC and Goldman Sachs are two sides of the same coin.
Because the mainstream media is the way it is, if there is a legal battle between Goldman and the SEC, the mainstream media shall probably partake of some of the positioning that Taibbi has already presented. The young lawyers at the SEC (yearning to work on Wall Street) will be presented as warriors for the aggrieved middle class and the young traders and bankers at Goldman shall be presented as Godless, greedy sociopaths.
Go on YouTube these days and watch videos of American civil and military authorities busting down doors and shooting family mutts while in search of dollar bags of marijuana, or throwing Canadian tourists in jail for not being polite enough when crossing the border, or tasering fans running across baseball fields. Read about the debates in the American congress over additional taxes for Americans and how the IRS is going to be equipped with shotguns, apparently to help with collections. Read about how Homeland Security is targeting American military veterans as potential terrorists, and those who participate in Tea Party protests, too. Go online and try to understand the ramifications and results of America's serial wars in the Mideast – the radiation poisoning from depleted-uranium weapons and the endless civilian killings. We understand that Goldman is a "great vampire squid" but what has the US government become? Taibbi defines civilization as "a collective decision by all of us not to screw each other over even when we can." What mirror is he looking in?