In this good post, Jared Bernstein, who is one of the few prominent writers in economics who is often close to being right, asks “How Did Things Get So Screwed Up?” he answers that it’s money, ideology, and a rejection of fact-based policy analysis. He thinks that more pragmatism and willingness to accept facts would really help our politics.
But pragmatism is a vague term, and we have to be careful about what we mean by it. Few politicians have been more pragmatic than President Obama in the sense that he is willing to compromise principles to get something done. In being so pragmatic, I think he has damaged his presidency.
He never took the big banks into resolution when they were insolvent; but instead continued the bailouts and left control of lending and credit to the banks to the detriment of small business and people. In not taking them into resolution, he also left the overweening power of Wall Street and the big banks in place, a big mistake having consequences for the rest of his presidency.
In doing this, he also opened the way to those big obscene bonuses based on fictitious profits which the bank traders have enjoyed since 2009, and which so angered the American people. In passing the recovery act, he compromised its size and effectiveness for a few Republican votes, resulting in too small a stimulus, years of continuing high unemployment, and a major threat to his presidency and his re-election chances.
His approach to health care was so “pragmatic” that the ACA became an insurance company bailout whose full benefits can’t be demonstrated until 2014, and which became a target leading to Republican control of the House and a near policy stalemate for the past two years. In addition, the bill is far from a solution to the problem of fatalities occurring due to lack of insurance coverage.
His approach to financial regulation has produced two inadequate bills First, the Credit Card Reform Act, which by failing to regulate credit card interest rates still allows CC interest at usurious levels as high as 30%, and this in a time when the cost of money to the banks is close to 0%. And second, the FINREG bill which fails to solve the main problem it was supposed to address, namely the ability of the big banks and their traders to crash the global financial system.
In addition, President Obama has allowed pragmatism to supercede justice in a number of areas. One of these is in the mortgage fraud area, where there have been only very few and trivial prosecutions bringing those who committed fraud to account. And the banks that were at the basis of these control frauds, have been allowed to negotiate very small settlements that are little more than slaps on the wrist when measured against the Trillions of Dollars of fraud they’ve committed.
A second area is in Government assistance to those harmed by the crash. The President’s pragmatism seemed to him to dictate that he bail out the banking system, AIG, and the auto industry. But he evidently didn’t feel a pragmatic need to bailout small business, working people, and student loan recipients, to help them cope with the effects of the Great Recession; and the Administration’s programs for helping homeowners with mortgage difficulties have been laughable in their negligible impact on the mortgage market.
Another area in which pragmatism has superceded justice has been in national security. Look at the drone program and its results in killing uninvolved civilians. Look at the killings of American citizens without trial. Look at the President’s claims that he has the authority to serve as judge, jury, and executioner, when it comes to deciding which American citizens are to be killed because he judges them to be enemy combatants.
I could go on and on with these examples, and none of this should be taken as a reason for voting for Romney rather than the President, or for voting for Jill Stein rather than the President, if you live in a swing state. But the point I am making is that when pragmatism supercedes justice, or when it is used to pass legislation that fails to solve problems so that politicians can then point to “accomplishments” which actually accomplish very little, then I think it is the wrong kind of pragmatism, a pragmatism we don’t need and should avoid.
“Always look forward, never look backward” wasn’t the right way to go, because not investigating prosecuting, and punishing crimes creates a double standard of law and poisons the future. Until we can serve the needs of justice arising out of the Great Financial Crash, the Housing crisis and the decade following 9/11, we won’t be America again. We’ll only be a failing democracy, and an emerging plutocracy and a sad, shadow of the Land of the Free and the Home of the Brave!
So, to right things, I think we need more than fact-based pragmatism, Jared. We need pragmatism tempered by vision and justice. It is this kind of pragmatism, the pragmatism of Dewey, FDR, Harry Truman, and Jack Kennedy, which is absent from American politics today!
(Cross-posted from New Economic Perspectives.)