One cold morning the week before Christmas, I found myself huddled with a group of homeowners and religious leaders on Pennsylvania Avenue, in the shadow of the White House and the Treasury building. The homeowners, who had all worked hard to buy their first homes, and most of whom had put enough money down to qualify for fixed-rate mortgages only to be persuaded into more exotic mortgages, were facing imminent foreclosure. We had come to stand with them…
Clearly, the financial crisis is a structural meltdown that calls for increased government regulation of banks and other financial players. Members of faith communities, such as those who joined me in front of the Treasury building, are helping to push for this sort of reform.
He goes on to detail some “direct action” kinds of things, some of which are not bad. This is refreshing; growing up in TEC, I always got the impression that the ultimate objective of social liberals in the church was to get the government to do the work they advocated.
What he and others haven’t quite connected the dots on is the meaning of this: the core problem in our economic system is that it has become too centralised, and that the government is the key bad actor in this drama.
The biggest weakness in capitalism is that, over time, the survival of the “fittest” turns the system into a oligarchy/monopoly. Marx noted this phenomenon and used it against the system. American conservatives today won’t discuss that because, IMHO, they are shamed by the fact that they aren’t at the top, and because breaking up the centralisation, in their view, is a roadblock to their own upward social mobility.
But amongst non-socialist people in the U.S. it was not always so. Theodore Roosevelt’s response to the same phenomenon in the Gilded Age was to break up the “trusts,” the largest of which was Rockefeller’s Standard Oil trust. Breaking up the trusts created competition. We saw the same thing with the breakup of AT&T in the 1980’s.
Regulating the system in and of itself isn’t enough. This is especially true in view of the fact that a) our government is virtually bought by the larger financial institutions and b) our elitist snobs rely on central control–any kind of central control–to perpetuate their own dominance. Asking our government to regulate the financial system in the current climate is asking the fox to guard the chicken coop, and the opposition doesn’t have a viable Plan B just yet (or won’t use the one they had in the past.) His call to make the big banks smaller will fall on deaf ears on both sides of the aisle.
One more thing he said deserves comment:
And Islam prohibits the practice of usury. (Muslim-owned financial institutions that charge fees for service rather than interest have done amazingly well during this crisis; their practices offer some interesting models.)
Does he know what’s going on in Dubai these days? The central problem with Islamic banking in its homeland, the Middle East, is the lack of transparency, coupled with the usual money favouring/tribal politics that Islam only reinforces.