Sunday, January 9, 2011

The Banker's White House, African Women, and Sprinkle Out Economics

The money was all appropriated for the top in the hopes that it would trickle down to the needy. Mr. Hoover didn’t know that money trickled up. Give it to the people at the bottom and the people at the top will have it before night, anyhow. But it will at least have passed through the poor fellow’s hands. - Will Rogers
Nothing in anything I read about Barack Obama would have led me to believe that in his Presidency we would see as his Chief-of-Staff William Daley, a man who
  • was President and CEO of Amalgamated Bank of Chicago;
  • was special counsel to President Clinton on issues relating to the passage of the North American Free Trade Agreement (NAFTA);
  • was a President of what we now know as AT&T;
  • was Midwest Chairman of J.P. Morgan Chase and Bank One Corp. to oversee post-merger operations; and
  • currently serves on the Boards of Directors of Boeing and Merck & Co.
In an Administration already awash in bankers, this is appalling and seems more so when on Friday Obama announced as his Chief Economic Advisor former Goldman Sachs advisor Gene Sperling.

Sperling was one of the principal Clinton Administration negotiators securing the passage of the Financial Modernization Act of 1999 that repealed large portions of the depression-era Glass-Stegall Act deregulating banks, securities firms and insurance companies, ultimately leading to the economic collapse of 2007.

I'm sorry. I just can't remember when the policy orientation of Democratic Party leaders merged with the views of international bankers. At one time, it was a Party that at least on the surface vehemently opposed "trickle down" economics.

Apparently, sometime in the past 30 years Democratic Party leaders embraced "sprinkle out" economics, and apparently did so in concert with Republican Party leaders.

Elected officials from both parties have watched as American corporations "sprinkled out" to other countries jobs that previously at least had "trickled down" some of the benefits of economic growth to ordinary Americans. It has become so bad that practically everyone acknowledges that in the midst of The Great Recession "recovery" American corporations are hiring thousands of workers, but just not in the United States.

These same elected officials "sprinkled out" our national debt to Chinese and Middle Eastern interests, people from whom we can't expect to find sympathy for what ordinary Americans understand is "The American Way."

Let's take a hard look Sperling's record, as an example of what's wrong with the Obama White House.

In 2008 while our economy collapsed because of his work on behalf of the banking industry during the Clinton Administration, according to Bloomberg New's analysis of financial disclosure forms Goldman Sachs paid Sperling $887,727 for advice on one of its charitable projects, known as "10,000 Women," which provides business education to women in poor countries.

It sounds like laudable work except that well over 10,000 American women were in the process of losing their homes - their small piece of the "Ownership Society" - while he earned over a million dollars that year (the rest came from speaking to hedge fund executives).

The problem with guys like Sperling, Daley, President Obama, and former President Clinton when he was in office is that they explore "growing" wealth as an intellectual scientific subject as if it is about increasing spinach production, expressing lofty thoughts about economic theory while carefully avoiding the obvious - the accumulation of obscene amounts of wealth by a relative few corporations and individuals around the world.

They reach to find evidence of successful women in Africa who have increased their income from less than $2,000 a year to as much as $5,000 a year. They never explore the idea that while the world's poor are seeing some economic growth, middle class women in the U.S., Europe, and Japan are seeing a greater relative loss of real income.

The potential is that the income of those successful African women and of those middle class women are going to reach a common level - at $15,000 - $18,000 a year in today's dollars. This is an income level that will marginalize the economic (and political) power of most people.

The Obama Administration is dismissing concern from the Political Left in much the same manner as the Bush White House essentially abandoned the Christian Right. Ironically, both groups are concerned about the welfare of the rapidly growing number of Americans on the margins of our economy. The two groups just don't approach solutions from the same perspective.

But neither group believes that the solution to improving the lives of ordinary people around the world is to increase the sales of yachts. Yes, just as economists report the recession is over, various sources report yacht sales are up in Texas, the European Union, "Communist" China and other parts of the Third World. I guess Sperling's advice to Goldman Sachs was so good those 10,000 women are buying yachts.

Advocating policies that improve the world-wide sales of yachts is exactly the image of White House economic policy for the past 20 years and appears will remain the policy orientation.

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