William K. Black
August 7, 2016 Bloomington, MN
Thomas Friedman’s economic illiteracy and sycophancy for Wall Street “elites” have never been in doubt, but he has (unknowingly) plumbed new depths in his columns advising Hillary Clinton to remake the Democratic Party in Bill’s image – by embracing Wall Street’s dream of deregulation. Friedman has literally learned nothing from the three great epidemics of accounting control fraud (“liar’s” loans, inflated appraisals, and fraudulent resale of these fraudulently originated mortgages) that drove the financial crisis and the Great Recession.
In other columns in this series on Friedman’s columns advising Hillary on moving the Democratic Party well to the right of the Republican Party on economic issues, I show that Friedman has literally learned nothing from the successes of stimulus, education, and infrastructure, the horrific failures of austerity and deregulation, or his repeated distortion of “capitalism” and “socialism.”. Friedman gives no indication that he realizes that (1) his economic dogmas were all falsified by our recurrent financial crises and (2) the policies implemented on the basis of those dogmas proved disastrous.
Friedman advises Hillary to embrace Wall Street elites and adopt the deregulatory, desupervisory, and de facto decriminalization (the three “de’s”) policies that Ronald Reagan, Bill Clinton, and George W. Bush implemented. The three de’s have created the “criminogenic environments” that led to the epidemics of accounting control fraud that drove the savings and loan debacle, the Enron-era accounting control fraud scandals, and the most recent crisis. Friedman urges Hillary to use Bill as her model and embrace elite bankers and financial deregulation because, what could go wrong?
In his column entitled How Clinton Could Knock Trump Out, Friedman bemoans “the anti-bank sentiment of the Democratic Party.”
Friedman’s only implicit recognition that bank CEOs were the problem rather than the solution was a trademark Friedman slogan that he uses as his substitute for analysis and proposing an actual policy.
We need to prevent recklessness, not risk-taking.
This slogan was a punchier version of the one he had auditioned in his column a week earlier.
Web People also understand that while we want to prevent another bout of recklessness on Wall Street, we don’t want to choke off risk-taking, which is the engine of growth and entrepreneurship.
Friedman tried out the “web people” label in his column entitled “Web People vs. Wall People.” Web people are good people – like Friedman – who embrace the rigged financial system, while “wall people” are whiny people who complain that the system is rigged by Wall Street elites with the aid of their political cronies to ensure that Wall Street elites will be the winners at the expense of their fellow citizens. It escapes Friedman’s attention that rather than being the “engine of growth,” the rigged banking system of “capitalist” nations was the engine of the mass destruction of wealth. The rigged system produced deeply negative growth and was saved only by what Friedman derides as “socialism.”
“Recklessness” by CEOs had nothing to do with the U.S. financial crisis. The three fraud epidemics have everything to do with driving the financial crisis. No one serious doubts that the second phase of the savings and loan debacle and the Enron-era accounting scandals were driven by elite frauds. But Friedman will not use the “f” word for the most obvious of reasons – he wants Hillary to go full-Bill and return to openly embracing bank CEOs’ cash and deregulatory dreams. In his “knock out” column, Friedman made his pitch that promising financial deregulation was the KO punch Clinton could deliver to Trump.
Clinton should be reaching out to [business Republicans] with a real pro-growth, start-up, deregulation, entrepreneurship agenda and give them a positive reason to vote for her.
In his homage to “web people,” Friedman told Hillary to repeat Bill’s disastrous embrace of Wall Street elites.
Having been secretary of state, Clinton has been touching the world. She knows America has to build its future on a Web People’s platform, which was first articulated by Bill Clinton, and, to this day, is best articulated by him. But Hillary has not always shown the courage of her own, or her husband’s, convictions.
Yes, the word that comes to mind when one thinks of Bill is “courage.”
Friedman says “It scares me that people are so fed up with elites….” People are not “fed up” with the Wall Street elites – they are furious and disgusted. They realize that the distinguishing characteristics that are “elite” about Wall Street bankers are their egos and pay. Our greatest reason for hoping that we will not repeat for the fourth time the disaster of implementing the three “de’s” is that people are so fed up” with financial “elites.” It is a mystery to me how even Friedman could be so out of touch with reality that he is “scared” because people are fed up with Wall Street elites. Friedman may be the only person in the world who isn’t a Wall Street press flack – wait, that’s exactly what Friedman is – who is not “fed up” with Wall Street elites. Indeed, “fed up” does not begin to capture what people rationally feel about Wall Street’s purported “elites.”
The regulatory and supervisory actions that a competent financial regulator takes to reduce fraud would also reduce recklessness if that were the problem. Friedman does not even attempt to explain how he would make his slogan into a policy and why his adoption of the three de’s would not produce our fourth financial disaster of the modern era – as it has the last three times our politicians made real the bankers’ dreams.
“Bubble” Bill Clinton did not bring the Nation economic success. His bubbles facilitated two catastrophic episodes and those bubbles were hyper-inflated by elite frauds made possible by his embrace of the bankers’ greatest dream – the three de’s. He set the stage for catastrophe.