Thomas Friedman’s Big Idea for Hillary: Embrace Wall Street and Deregulation

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.

8 responses to “Thomas Friedman’s Big Idea for Hillary: Embrace Wall Street and Deregulation

  1. Just discovered that Jill Stein is a fan of yours. She and Donald Trump are the only to presidential candidates that understand the FED just creates money. Recognizing MMT a little may be the only sane thing that Donald Trump has said. But Jill Stein is a very promising vehicle for carrying on the message.

  2. James Cooley

    When I was a graduate student in psychology, one of my cohorts was conducting a series of intricate experiments that were an attempt to replicate and expand a fleeting phenomena reported by only one “elite” researcher. Much to his frustration only about one third of his subjects replicated the phenomena, about one third showed a slight tendency to produce the phenomena, and the last third show nothing or the opposite effect. The frustrated student continually threatened to submit the non-performing subjects to “wall therapy”, though he finally selected another dissertation topic instead. Perhaps a little “wall therapy” for the street elites is justified after the three previous fraud epidemics, just saying.

  3. Informative article. Thanks, WKB.

    Matt Taibbi also came out recently with a good article on the topic of Friedman.

    It’s great to see Friedman exposed for who and what he is. Too many people have gotten the wool pulled over their eyes for far too long by this guy.

    Thomas Friedman Goes to the Wall
    High priest of globalization lashes out against the enemies of progress

  4. A son tells his father that he’s decided to go to Journalism School and become a reporter for the New York Times.

    “That’s great son!” says dad. “Then you can expose how all these goverment regulations caused the economic mess we’re in.”

    “Actually dad, it was negligent government supervision that allowed Wall Street banks to explode the markets into the Great Recession,” replied the son.

    “Then you can write about how we need to exterminate all these Muslim terrorists,” said the dad.

    “Well dad, it was our invasion of Iraq under false pretences and our continual bombing since that fuels the growth of Islamic world terrorism,” the son said.

    “And then you can finally reveal the hoax of global warming,” said the dad.

    “As a matter of fact dad, almost all independent scientists studying the matter say global climate change is irrefutable and the only disagreement among them is how fast it’s occurring,” retorted the son.

    “Stop pretending to be so smart son,” said the dad, “or you’ll never make it to the New York Times.”

  5. If Hillary wins, which seems very likely, Bernie and WKB and lots of the rest of us need to pressure her to be a progreessive, rather than to go far to the Right of the GOP, which is a definite possibility. We need to tell her “People who voted for you voted for a progressive. So BE a progressive.”

  6. Kelly Pinkham

    As with his “The World is Flat” paean to the Neoliberal paradigm, Thomas Friedman has again demonstrated his extraordinary inability (refusal?) to see the simple accumulating social and human costs resulting from what he so assiduously has contorted himself to defend — the systemic economic jackboot pressing firmly upon the back of the neck of countless flattened proles around our globe. Despite the example of the Panama Papers and much other evidence to the contrary, how should we interpret Friedman’s call for caution and even for the defense of a system riddled with endemic elite criminality? Is he cynically branding himself as a ‘voice of moderation’ for future clients and audiences? Or, perhaps he’s a stealth neoliberal ideologue? Whatever Mr. Friedman is ‘about,’ regarding matters of macro and especially forensic economics, he is obviously in over his head; dangerously so, considering his desired status as a public intellectual. Bill Black clearly delineates those deficiencies. If he wishes to remain truly relevant in the debates to come, Mr. Friedman should pay heed to Professor Black’s critique. It is a gift, if he can but see it.

  7. I agree completely with this analysis of Friedman’s recent work. I am particularly disturbed by his failure to acknowledge the need for more regulations to constrain the use of fossil fuels, to address the savage ecomomic inequalities of what unrestraind capatalism has created, and the need to provide adequate health care and housing for all. The over simplified use of the terms capatalism and socialism is lamentable.

  8. Blue Pilgrim

    Jill (and others):
    Once a president, or other politician, is elected all the official power of the people has been given up. Clinton will effectively say, ‘I’m in office now and will do what I want, and your only recourse is not vote for me next — if you can remember this that long’. Given the history of politicians actions and voting, it seems doubtful that most people will remember anything more than a few weeks or resist being distracted by the new ‘crisis’ or hot story. That’s why we need to be organized, and develop organizational memory.

    As for ‘extra-judicial’ actions, outside of the electoral system, and putting pressure on, what sort of pressure can exist? Demonstrations in the street, by few people, who will be kettled up and jailed or fined? Where is ‘power of the people’ now, unless truly massive numbers participate, and how many will be willing to go up against the surveillance and police — and be vilified by the media?

    A general strike? Yes, that’s powerful, but is also damaging to the people, and those who agitate for it will, again, be demonized by the politicans and the the media, and is difficult to sustain. Stop paying taxes? That’s disruptive, but is criminalized, and frightening to people — and the government doesn’t really need taxes anyway.

    But there is one point upon which pressure can be put — easily, legally, and without great harm (and in fact with much good accruing to the public): boycott the media. Turn off the cable and stop watching corporate TV (can you believe a 1984 where the proles pay big moneyfor their telescreens and watch it completely voluntarily, safe at home?), and wrap your fish in something besides the New York Times). Will the plutocracy pay for free telescreen for everyone, or try to enforce a TV tax like the Brits? Where will the companies go to advertise when TV disappears? What will poor Thom Friedman do when no one can hear or see him? Collect old copies of the NYT and sell fish in them? People can devise other means to communicate even if an open internet goes away, which would not be so easy to do without disrupting the plutocracy even more (other nations have done it).

    Pressure against a rock wall does nothing; we have to find practical, sensitive pressure points and flows the corrupt system depends upon. When the government is forced to admit the tax system is not to run government but a means to pressure control the people, when the propaganda and disinformation outlets are gone, and when the only force available is overt police state violence, the entire system will fall into ruins and it will be clear to everyone who the sides of the class war are. Is the ruling class willing to destroy the US, and Europe, and have them become another Libya or Ukraine, with nothing left to rule over? Such ‘feudal lords’ can hardly to expect to survive long in this age under such circumstances. The age of kings is over.